VIRGINIA DEPARTMENT OF CONSERVATION
AND ECONOMIC DEVELOPMENT
DIVISION OF WATER RESOURCES
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COMPREHENSIVE WATER RESOURCES PLAN
VOLUME IT- ECONOMIC BASE STUDY
PLANNING BULLETIN 202
1967
VIRGINIA DEPARTMENT OF CONSERVATION
AND ECONOMIC DEVELOPMENT
DIVISION OF WATER RESOURCES
MONTGOMERY
RADFORD
BAS'fN
TENN.
N.C
COMPREHENSIVE WATER RESOURCES PLA
Mew/
VOLUME I - ECONOMIC BASE STUDY
PLANNING BULLETIN 202
AUGUST, 1967
Digitized by the Internet Archive
in 2012 with funding from
LYRASIS Members and Sloan Foundation
http://archive.org/details/newriverbasincom02virg
NEW RIVER BASIN COMPREHENSIVE WATER RESOURCES PLAN
VOLUME II - ECONOMIC BASE STUDY
Planning Bui letin 202
Commonwealth of Virginia
Department of Conservation and Economic Development
Division of Water Resources
Richmond, V i rg i n i a
August - 1967
TABLE OF CONTENTS
Page
ACKNOWLEDGMENTS
FOREWORD i
CHAPTER
I THE SHAPE OF THE FUTURE NEW RIVER BASIN 1
II METHODOLOGY OF ECONOMIC STUDY 3
Economic Bases for River Basin Planning k
Ml ECONOMIC ACTIVITY IN THE NEW RIVER BASIN AREA 3
Bland County 8
Carroll County 8
Cra ig County 9
Floyd County 9
Giles County 10
Grayson County 1 1
Montgomery County 1 1
Pulaski County 12
Smyth County 13
Tazewel 1 County 1 3
Wythe County \k
Galax City 1 A
Radford City 15
The Role of Economics in the New River Basin
Analys is 15
Understanding the Nature of the New River
Basin Economy 17
TABLE OF CONTENTS (CONTINUED)
CHAPTER Page
IV POPULATION PROJECTIONS 23
V EMPLOYMENT PROJECTIONS 39
VI INDUSTRIAL OUTLOOK IN THE NEW RIVER BASIN 43
Related Land Resource Development Pattern 43
Growth Belts, New River Basin 46
Experimental Value Added Extension 48
Chemical and Allied industries 49
Outlook for the Food Industry 52
Outlook for Textile Mill Products 53
Outlook for Mineral Industry 55
Outlook for the Pulp and Paper Industry 55
Capital Investment Required 56
Projected Gross Manufacturing Output 58
VII GROSS NATIONAL PRODUCT 61
Projection of Gross National Product 65
VIII TRADE IN THE NEW RIVER BAS ! N 70
IX REGIONAL ACCOUNTING AND FLOWS OF MONETARY
INFLUENCE 73
Flows of Monetary Influence 75
X PERSONAL INCOME IN THE NEW RIVER BASIN 78
XI DEVELOPMENTAL ASPECTS OF RECREATION 92
XII THE VALUE OF WATER UNDER RIPARIAN LAW 95
XIII WASTE IN THE NEW RIVER ECONOMY 97
XIV WATER COSTS AND VALUATION OF WATER RESOURCES 99
Comparative Water Costs 99
Valuation of Water Resources 103
TABLE OF CONTENTS (CONTINUED)
CHAPTER Page
XV INDUSTRIAL GROWTH AND FUTURE WATER NEEDS 106
SIC Water Use Comparison 107
Future Water Requirements of Chemical and
Allied Industries 108
XVI CAPITAL REQUIREMENTS 1 11
XVII ALLOCATION OF RESOURCES AND THEIR ECONOMIC
INPUTS AND OUTPUTS 1 15
XVIII WATER-ECONOMIC WEIGHTS OF ACTIVITIES ON A
MONETARY BASIS IN THE NEW RIVER 3ASIN 1 24
XIX THE INFLUENCE OF MONETARY FACTORS ON LAND
VALUES AND SUBSEQUENT URBANIZATION IN A RURAL
ECONOMY 126
XX EFFECT OF REMOVAL OF MARGINAL LANDS WITHIN THE
BASIN AND SUBSTITUTION OF AUGMENTED WATER
RESOURCE DEVELOPMENTS 132
XXI WATER RESOURCES ECONOMIC DEVELOPMENT PROGRAM
FOR THE NEW RIVER AND GOALS FOR DEVELOPMENT
PLANNING 13^
Goals of Development Planning 138
LIST OF PLATES
PLATE NO. Page
1 Approximate Distribution of Land, New River
Basin I960 18
2 Population Projections in New River Basin
1965-2020 24
3 "Benchmark" Series A-Population in New River
Basin 1980-2020 33
4 Virginia's Population 1940-2020 34
5 Population Projection - State of Virginia
1970-2020 35
6 Population Projection - United States 1960-2020 36
7 Density of Population of the United States 38
8 Percent of Labor Force Employed by Sectors -
Bland, Pulaski, and Wythe 40
9 Growth Beits, New River Basin 47
10 Major Chemical Industry Location Along New River 50
11 Growth of Chemical and Allied industries
Output 1960-2020 51
12 Projected Tons Per Day, Paper Production
(High Grade), New River Basin 1980-2020 57
13 State and Local Government Purchases of
Structures and Equipment Compared with GNP 62
14 Gross National Product Historical 63
15 Projected GNP 1970-2010 64
16 Flows of Monetary influence 74
17 United States Constant Dollar Per Capita
Income 80
18 United States Current Dollar Per Capita
Income 81
LIST OF PLATES (CONTINUED)
PLATE NO. Page
19 Virginia Per Capita Personal Income with
Projections for 1970 82
20 Per Capita Income 1 960 Counties and Cities
New River Basin, Virginia 83
21 "Benchmark" Per Capita Income 8k
22 "Benchmark" Per Capita income Projection
Appalachian Area of New River Basin 1960-2020 85
23 Historical Growth in Per Capita Income in
Dollars 86
2k Historical Growth in Per Capita Income in
Dollars- Floyd and Craig Counties 87
25 Historical Growth in Per Capita Income in
Dollars- Grayson and Giles Counties 88
26 Historical Growth in Per Capita Income in
Dol lars- Montgomery County 89
27 Historical Growth in Per Capita Income in
Dollars- Wythe and Pulaski Counties 90
28 Historical Growth in Per Capita Income in
Dollars- Smyth and Tazewell Counties 91
29 National Cost of Water Per 1,000 Gallons 100
30 Composite Point Industrial Water Rates at
Thousand Gallon Points 102
31 Financial Factors influencing the New River
Basin 10*4
32 Projected Water Use, Chemical and Allied
Industries, 1960-2020 109
33 Prices, Land, Common Stocks, and Wholesale
Commod i t i es 1 3 1
LIST OF TABLES
TABLE NO. Page
1 Population Projections, Component Method 25
2 Population Projections "Benchmark" Series A 29
3 Population Projections "Benchmark" Series B 30
k Population Projections "Growth" Series A 31
5 Population Projections "Growth" Series B 32
6 Projected Population Densities, 1930-2020
"Benchmark" Series A 37
7 Projected Population Densities, 1930-2020
"Benchmark" Series B 37
8 Projected Population Densities, 1930-2020
"Growth" Series A 37
9 Projected Population Densities, 1930-2020
"Growth" Series B 37
10 New River Basin Area Projected Employment
by Major Industry 1960-2020 41
11 New River Basin Value Added Extension 1960-2020 kk
12 New River Basin Actual and Projected Gross
Manufacturing Output 59
13 Implicit Price Deflators for Personal Consump-
tion Expenditures for Type of Product 66
14 Implicit Price Deflators for Gross National
Product by Major Type of Product 67
15 New River 3asin "Gross Regional Output" 68
16 Basic Assumptions for State and Local Public
Facility Needs and Financing Study 69
17 1963 Wholesale and Retail Trade, New River
Basin Area 72
ACKNOWLEDGMENTS
In Volume I, Planning Bulletin 201, of the New River Basin
Comprehensive Water Resources Plan in Virginia, December 1 966 , the
Division of Water Resources of the Virginia Department of Conserva-
tion and Economic Development gratefully acknowledged the contri-
butions of a number of Federal, State, and local governmental
agencies and corporate or private organizations. Twelve of the
contributing departments and divisions of the Virginia State
Government were listed along with the names of the eleven counties
and two cities of the New River Basin in Virginia whose officials
and citizens have cooperated in the survey The continuing interest
of all of these in the survey and the subsequent bulletins is
appreciated,
in particular the assistance of the Division of Planning, the
Division of Industrial Development, United States Army Corps of
Engineers, Federal Water Po'lution Control Administration and the
area development departments of the Norfolk and Western Railway
Company and the Appalachian Power Company are appreciated Every
effort has been made to provide useful, practical information
and i deas
FOREWORD
The Comprehensive New River Basin Water Resources Plan is
contained in six volumes.
Volume I - Introduction
Volume II - Economic Base Analysis
Volume III - Hydrologic Analysis
Volume IV - Water Resource Requirement
Volume V - Engineering Development Alternatives
Volume VI - Implementation of Development Alternatives
"The ultimate aim of river projects and programs, in common
with all other productive activity, is to satisfy human needs and
desires. The objectives of economic analysis in planning river
basin and watershed programs is to provide a guide for effective
use of the required economic resources, such as land, labor and
materials, in producing goods and services to satisfy human wants
by determining whether economic resources would be used more effectively
than would be the case without the project.""
The following summary of chapters in Volume II is included
for the benefit of those reading the volume who do not wish to
examine the technical data and analyses in the Economic Base Study
i n deta i 1 .
Chapter I contains a discussion of the shape of the future
New River Basin and a look into the anticipated economy in the year 2020.
* "Proposed Practices for Economic Analysis of River Basin Projects."
Subcommittee on Evaluation Standards, Washington, D. C, Revised
May 1958, p. 5.
Chapter II provides the methodology of economic study and
the New River Basin's place in the national, state, and regional
economy. Approaches to economic study of river basins are given
in the chapter.
Chapter III includes information regarding current economic
activity in the Basin area and the role of economics in Basin analysis
Chapter IV contains an analysis of anticipated population
growth within a framework of alternative assumptions to 2020.
Chapter V indicates the current employment picture in the
Basin and employment projections for the New River Basin to 2020,
Chapter VI is a study of industrial outlook in the Basin and
contains requirements for development of industrial resources.
Probable growth belts in the New River Basin and projection of
value added and gross manufacturing output are included in the
chapter.
Chapter VII shows the historical trend of Gross National Product
and a projection of future G.N. P. An indication of gross regional
output in the Basin to 2020 is given.
Chapter VIM includes information on trade in the New River
Basin and figures for wholesale and retail trade in the Basin area.
Chapter IX is a discussion of regional accounting and the
flows of monetary influence.
Chapter X provides information on current personal income
in the New River Basin. Projections of per capita income in major
political subdivisions of the Basin are shown.
Chapter XI contains an evaluation of Developmental Aspects
of Recreation and the influence of expenditures for recreation
on the New River Basin Economy.
Chapter XII is a brief discussion of the value of water under
riparian law.
Chapter XIII is a brief look at economic waste in the New
River Basin. Consideration is given in this chapter to economic
alternatives in the use of the area's resources.
Chapter XIV provides figures on the cost of water in various
areas of the Basin and estimates of the value of elements of water
resource development in the Basin.
Chapter XV includes information on existing industrial water
use in the Basin and predictions of future water requirements for
the chemical and allied industries.
Chapter XVI has preliminary estimates of capital requirements
for future water resource development in the New River Basin. The
role of water and related land resources in Basin Development is
cons idered.
Chapter XVII considers resources and their economic inputs
and outputs. The process of selection and distribution of desired
uses of resources is explained.
Chapter XVIII contains water-economic weights of activities
on a monetary basis in the New River Basin. A judgment is made
regarding the impact of investment in water resources on the economy
of the Basin. The requirements for water resource development
derived from economic factors which indicate this need are illustrated
Chapter XIX considers the influence of monetary factors on
land values and subsequent urbanization in a rural economy. The
effects of introducing common financial factors into water resource
development decisions are explored.
i v
Chapter XX evaluates the possible effects of removing mar-
ginal lands within the Basin and the substitution of water and
related land resource development for these lands.
Chapter XXI is a look at water resource economic development
programs for the Basin. Possible goals for development planning
and the desired conditions for growth are stated.
CHAPTER I
THE SHAPE OF THE FUTURE NEW RIVER BASIN
Let us look at the New River 3asin in the year 2020. Pop-
ulation wMl be nearly double that reported in I960. Projections
indicate that three hundred and forty-one thousand people will
live in the Basin in 2020 compared with 180,000 in i960. Much
of this population will, in all probability, be concentrated around
presently existing cities and towns. Land values will be much
higher than they presently are, Financial institutions will greatly
improve their range of services and good influences. An urban
consciousness will pervade the entire area. Agriculture will make
more intensive use of open lands. Casual recreation will be more
limited than it is at the present time, A rising standard of living,
increases in income, extended leisure time and a better educated
population will change the shape of demands to a more sophisticated
level. It can be expected that increases in quality of services
will be sought. Extensive recreation developments, making use
of water resource potential, will be required to insure healthy
growth. The chemical industry, an improved food industry centered
in meat products and a pulp and paper industry most probably will
be significant factors in the economy of the area- Existing industries
will expand. Outside visitors, attracted by desirable water resource
facilities, will make increased use of the area. Transportation
systems wi'l be greatly improved. More people will remain in the
geographical area in which they were trained with possibilities for
1
employment in progressive industries. Salaries will provide a
better standard of living. Local, state, and federal facilities
will increase and there will be more government employees in the
area. Open space outside the urban areas will be available. The
New River Basin will be a desirable area in which to live and work
in 2020.
CHAPTER I I
METHODOLOGY OF ECONOMIC STUDY
The entire New River Sasin analysis is done in relation to
certain assumptions regarding the rate of growth of the New River
3asin as compared with the National economy.
In making those projections, no major war and no major change
in the Federal system of government has been assumed. Such changes
could have major effects on our projection of gross output and
the subsequent experimental projection of value added for the New
River 3asin. We have postulated a Gross National Product growing
at the approximate rates shown in Table 16. We are assuming an
eventually balanced budget. Possible changes in Federal, State
and Local taxation have been assumed to be in a direction which
would encourage healthy growth in industry and personal disposable
i ncome.
Technology carries the heaviest load. Its expected contri-
bution to increased output per worker is assumed throughout the
"long" range of the projections. The most startling change affecting
labor will probably be a reorientation which will be required to
establish new duties and remuneration schedules for workers employed
in manufacturing. Labor will be required to expend more in its
approach in order to capture its fair share of this progress. In
a word, the worker of the future in the New River Basin will have,
to see that he is more skilled.
Population growth within the New River Basin is assumed to
be more modest than that for the country as a whole. However,
the mix of workers is expected to change in favor of younger and
more highly skilled personnel - especially in the later years of
the projection.
National growth of money and credit, at first, is expected
to exceed that of the New River Basin region. Even in later projection
years, the Basin is expected to lag behind the Nation as a whole.
Economic Bases for River Basin Planning
Considerable emphasis in past river basin planning has centered
upon Federal theory in the establishment of 3enef it/Cost ratios.
The citizen who lacks training in the nuances of economic
theory, or indeed in administrative procedure, is apt to view Federal
Benefit/Cost practices as an absolute which can readily be translated
to any application of economic analysis.
Benefit/Cost formulae are only as good as the validity of
the concepts they enunciate. The assignment of dollar weights
to benefits to be derived from flood control can be limited by
poor scientific research into flood frequency. The extension of
these frequencies and calculation of the estimated flood damages
to property in given years is an accounting exercise which must
be subjected to intensive testing. One of the most difficult areas
of analysis begins where intangibles take over. There is, perhaps,
an over-reliance on gathered data which may be less than reliable,
although it is the best available. In the area of assigning a
dollar value to recreation benefits for a proposed project, great
care is required. The simple extension of average expenditures
per day by visitors drawn from a certain circumscribed radius has
been subjected to only limited corroboration. It is possible,
under certain circumstances, that benefits are even being under-
estimated by the use of current methodology.
Project orientation has been the key to analysis in the past.
The basic nature of Benefit/Cost analysis as a measure of social
allocation of expenditures which will be of measurable benefit
to the Nation has not been clearly emphasized in regional application
Instead, B/C ratios have been regarded as absolutes of economic
analys i s .
Initial State programs have found that they require a more
objective analysis of river basins. This analysis cannot, in its
early stages, be project-oriented. The orientation is toward the
entire economic area of the river basin under study. The scientific
(physical) definition of a river basin, determined by the points
at which the flow of surface supply water to the major river begins,
is not an exact fit to the economic factors which heavily rely
upon and influence the water resource development in the basin,
Water and related land resources are the basis for an approach
to economic analysis of river basins. This approach permits consi-
deration of all scarce resources and their optimal uses, which
is the essence of basic economics. The output of the economist
is a necessary input for engineers and planners of all types.
An accelerated development of regional economics has brought
forth a new body of regional theory. Some of this theory is useful
in river basin planning. In reality, regional theory is an entirely
separate field which would properly be a consumer of river basin
plans. Economic development planning would be the natural, immediate
consumer of river basin plans.
Methodology has been developed to aid in economic analysis
but has not been included in this volume in detail in order that
information may be understandable to non-professional readers.
It is anticipated that some of the results eminating from this
new methodology will prove stimulating.
New value theory must be developed to deal with specialized
interests arising from river basin analysis. Government method-
ology will probably continue to occupy a prominent position in
daily operations but does not supply the needed flexibility. An
outline of economic theory for river basin planning, which is being
developed, is presented below.
1. Value Theory - indicating the monetary value of water
and related land resources in varying mixes of resource use. It
is particularly important to question the concept that "water is
a free economic good." An evolution of law to express this relationship
in a social way may be forthcoming.
2. Projective Theory - on a sub-regional basis to establ ish
probable mixes of gross output or value added for manufacturing
within the Basin. Determination of parameters of size and growth
for application of input-output analysis will be made where justified.
3- Al locative Theory - establishing monetary relationships
between true water cost (as a function of value) including opportunity
costs in a variety of mixes, and other factors and sub-factors
of projection and consumption. Eventually, this will serve as
both input and output to projective theory.
This entire body of theory will have one quality which economic
research stands in need of at present. It will be related to market
realities. Consequently, it is hoped that many of the intermediate
projects will be of immediate value to a wide variety of consumers.
It is just such a body of theory which is being developed on the
State and Local levels augmented by the constructive efforts of
a number of Federal agencies.
The projections for the future in Volume II are accompanied
by a caution that they are not predictions but forecasts of what
might occur if a number of specific assumptions regarding the structure
and behavior of the economy materialize. As previously noted,
the basic premise was that national forces dominate economic development
throughout the United States.
In this context it can be said that an optimistic forecast
for the country filters down to the regional level. The method-
ological framework is based on the theory that employment, output,
population and personal income are functions of mutually determining
variables and should be linked in the analytical framework. In
the analysis we have included elements of location factor theory,
priority and ranking analysis, i nter- i ndust ry and inter-resource
linkages of modified input-output type and ratio analysis.
CHAPTER I I I
ECONOMIC ACTIVITY IN THE NEW RIVER BASIN AREA
A common sense key to accurate projections of growth in counties
and segments of counties must be based on past and present growth
indicators and on potential which is present. The following summary,
prepared from existing economic base studies of these counties,
is presented to highlight this purpose. Additional detailed information
can be obtained from the Office of the Governor, Division of Planning,
in Richmond. It would be misleading and inaccurate for a planner
to rule out growth in any one county or to suggest that any one
county will grow to the exclusion of its neighbors.
Bland County
Agriculture is important to Bland County. A large number
of farms specialize in livestock - fine beef, and dairy cattle,
sheep and hogs .
The greater part of farm income comes from the sale of cattle,
sheep and hogs. Dairy products are next in importance. In addition
to lumber production, hosiery manufacturing and sportswear manu-
facturing have become important to the County. Opportunities for
hunting and fishing are available in the County and several widely
used and attractive camps are located here. Forest covered 78
percent of the County in 1 965 -
Carrol 1 County
Dairy products and livestock are the biggest sources of cash
farm income. There is a milk condensary and a market for beef
8
cattle.
Recently, Carroll County was among the Nation's top ranking
counties in the production and harvesting of apples and cabbages.
Hill sv file has a small hospital and medical clinic.
Galax is a growing manufacturing center. The city was named
for a small green plant which grows abundantly in the mountains
nearby. The leaves of this plant are said to be processed by a
secret method for use in floral wreaths and shipped to florists
throughout the United States, The County is 55 percent forested
(1965).
Hosiery and knitwear mills are concentrated at Galax, Furniture
making, long the principal industry, has a large employment. Living
room and dining room furniture, church furniture, lumber, mirrors,
uniforms, printing, evaporated milk, upholstery and drapery materials,
and electrical components are just some of the products produced
in this area.
Craig County
Livestock, chiefly cattle, is the principal source of farm
income. Some swine and sheep are also produced. Dairying has
increased in recent years and is next in importance. The County
was 77 percent forested in 1965. Farm woodland products bring
in cash. Lumber, building and industrial sand, and apparel are among
Craig's principal products.
Floyd County
A large part of Floyd County is in farm land. Livestock raising
is the principal contributor to farm income. Dairy products are
now next in importance. Field crops such as burley tobacco, grain,
and hay augment farm income. Eggs are the chief poultry product.
Several sawmills and planing mills are located in the County.
The County is 5^ percent forestland ( 1 9b5) • There are garment
plants at the Town of Floyd which produce dresses, blouses and
accessor ies.
There is an established commuter pattern between work centers
in Roanoke, Radford and Galax, where employment is available, in
the textile, chemical, hosiery, and furniture industries.
Gi 1 es County
Seventy-two percent of the County is forested (1965)- Many
acres are included in the Jefferson National Forest, Mineral resources
include iron-bearing sandstone, manganese minerals, limestone
and dolomite, marl, sand, gravel, clay and shale. Limestone is
mined for use in the manufacture of industrial and chemical lime.
Limestone and dolomite are quarried for use as crushed stone, mine
safety dust, mineral feed supplement and agricultural stone.
Fertile limestone soils along the streams assist good crops
and pastures. Farm income is heavily influenced by the sale of
beef cattle, calves, and sheep. The sale of dairy products, fruits
and poultry is also important.
Giles County has long had industry, but initiation of pro-
duction at the Celanese Corporation's plant in 1 9^0 made the County
no longer primarily an agricultural area.
The Celanese Corporation plant at Narrows produces acetate
flake, yarn and fiber. Other products manufactured in the County
include shoe leather, lime, apparel, lumber, concrete blocks, and
grist mill products .
10
Grayson County
Lumber and quarry operations are located in Grayson County.
The County was 5& percent forestland in 1 965 - Grayson's pastures
produce good livestock. Farm income comes from the sale of cattle,
calves, dairy products and burley tobacco. Local farms have readily
available milk markets at Galax and Independence. A livestock
market serving this area is located at Galax, There is a wool
products mill at Mouth of Wilson.
At the present time Grayson County residents are also employed
in manufacturing at Fries, Independence and Galax (located on the
Car rol 1 -Grayson County line), Manufacturing in the area includes
cotton material and sheeting, hosiery, apparel, knitwear, evaporated
milk, upholstery and drapery materials, upholstered furniture,
bedroom furniture, specialty furniture, mirrors and lumber.
Montgomery County
The Jefferson National Forest extends into the northern portions
of the County. Sixty-two percent of the total area is wooded ( ! 965 ) -
Mineral resources presently being utilized include semi anthrac i te
coal, shale, limestone and sandstone.
Montgomery's limestone soils are adapted to grain and pasture
crops, making stock raising and dairy farming profitable. Livestock
can be sold conveniently in a large livestock market in Christians-
burg. There is a poultry market in Radford, Truck crops can be
sold in Roanoke,
The Virginia Polytechnic Institute is located at Blacksburg.
There is an airport at Blacksburg which serves the surrounding area.
There are many manufacturing plants in the Montgomery County
11
area, particularly at Radford (independent city) and at Christians-
burg.
Area manufactures include meat products, creamery products,
grain-mill products, rayon fabrics, apparel, propellants, chairs
and other wood products, agricultural stone, foundry products,
paper boxes, concrete products, sponge rubber products, campers
and electric motors and generators. The economy of Radford is
subject to stimulation by an increase in defense expenditures.
Pulaski County
Pulaski County is 53 percent forested (1965), primarily the
mountainous section which is too rugged for farming. The Jefferson
National Forest extends into the northern half of the County. Wood-
using industries abound in the County. Mineral resources include
semianthraci te coal, limestone and dolomite, ocher, zinc, manganese,
iron ore, sandstone, shale and clay.
Much of the farming section has fertile limestone soil in
which grain and pasture crops thrive. Livestock and dairy farms
contribute over 90 percent of gross farm income. Sheep and cattle
are the most important sources of meat products. The Pulaski County
livestock market, located west of Dublin, opened in 1953 to serve
the producers of this area. Livestock and poultry can also be
sold in the markets of Wytheville, Chr i st iansburg, and Radford.
Much wool is clipped in Pulaski County. The New River Valley Airport
i s located at Dubl in.
Manufacturing, centered chiefly in the town of Pulaski, gives
employment to more Countians than does agriculture. Knitting mills,
dyeing and finishing plants and yarn throwing operations make up
12
the textile sector of the County's economy. Other products include
sulphuric acid, iron sulfide, paint pigments of iron oxide, furniture,
hardwood flooring, millwork, plastic fabrics, mirrors, soft drinks,
iron castings and clothing.
Smyth County
Sixty-two percent of the area of Smyth County is in forest 965).
Jefferson National Forest forms a large portion of this mountainous
area. Mineral resources include large salt and gypsum deposits,
limestone and dolomite, clay, shale, sandstone, and manganese minerals.
The large deposits of limestone in the soil render it very
fertile. Raising of livestock is the leading source of income,
with dairy farming following close behind. The chief crops are
cabbage and burley tobacco. Horticultural specialities, apples
and leather also contribute greatly to farm income.
Manufacturing plants in Smyth County are located in Chi'howie,
Marion, and Saltville, Principal products include beverages, milk
products, hosiery, sleepwear, apparel, furniture, (wood, metal,
plastic) lumber, billiard and bowling items, gypsum board, chemical
compounds, stone and sand products, paving materials, bricks, radomes
and laminated plastics,
Tazewel 1 County
Sixty percent of the area of Tazewell County is in forest
(1965), Principal mineral resources of the County include coal,
limestone and dolomite, natural gas, and clay. Tazewell County
produced 241,118 tons of coal in I966. Coal mining provides significant
employment to the people of this County; however, lumbering still
plays an important role.
Livestock raising, dairy farming, and crop production are
of major significance in Tazewell County due to the high productivity
of the limestone soil.
Manufacturing is largely diversified in Tazewell County and
is centered around the towns of Bluefield and Richlands. Principal
products are ice cream and dairy products, carbonated beverages,
truck bodies, upholstery and drapery trimmings, lumber, millwork,
wooden caskets, mattresses, apparel, brick and clay tile, church
furniture, agricultural and chemical lime, concrete, monuments,
capacitors, dye works, mining machinery and equipment, and clay
dummies for mine explosions.
Wythe County
Wythe County is 52 percent forested (1965). Farm products
and livestock sales account for a large segment of farm income
in the County. The soil is rich in lime content and is very fertile.
Blue grass grows abundantly with little or no cultivation,
Rock and mineral products include crushed limestone and dolomite,
mined and concentrated lead and zinc ores, crushed quartzite, and
sand for building purposes. Other manufacturing includes milk
and dairy products, grain mills, garment and apparel products,
printing and publishing, concrete and brick, metal fasteners and
screws .
Ga 1 ax City
The City of Galax has plants which manufacture furniture,
mirrors, and flooring products. Manufacturers of wearing apparel
are located in the City. One of the largest producers of condensed
milk products in the country also maintains a plant here. The
surrounding area has many large dairy farms. For its population
and size, Galax City has a large industrial complex.
Radford City
Radford City is a potential nucleus for industrial growth.
It has all the prerequisites to encourage future industrial expansion
Industries include frozen milk products, broad woven fabrics, men's,
youth's and boy's shirts, dresses, sit-up paper-board boxes, sponge
rubber, iron foundry products, motors and generators, and truck
pick-up coaches. Radford College is located here.
The Role of Economics in the New River Basin Analysis
"Economics is usually defined as the study of man's activities
in using scarce means (resources) which are capable of satisfying
a variety of wants." —
Since we have variety in all human experiences and enterprise
and are dealing with a resource (water) that a great many people
in some areas have been speaking of as "scarce," we have a common
meeting ground for economic analysis. It is important to establish
the framework for this analysis on the National level, as so much
of our data is available on this level as well as on the State
level where we have additional indicators for our use. It is at
the local level that the best use of these necessarily abstract
indicators can find their employment.
The President's Water Resources Council has set the framework
for the study of water and related land resources with appropriate
gu idel i nes :
Modern Economics , Hart, Burns, Neal & Watson, Second Edition,
Harcourt, Brace & World, Inc., New York, 1953, page k.
15
"National economic development and development of each region
within the country is essential to the maintenance of national
strength and the achievement of satisfactory levels of living.
Water and related land resources development and management are
essential to economic development and growth through concurrent
provision for -
"Adequate supplies of surface and ground waters of suitable
quality for domestic, municipal, agricultural, and industrial uses
including grazing, forestry, and mineral development uses.
"Water quality facilities and controls to assure water of
suitable quality for all purposes.
"Water navigation facilities which provide a needed trans-
portation service with advantage to the Nation's transportation
system.
"Hydro-electric power where its provision can contribute advan-
tageously to a needed increase in power supply.
"Flood control or prevention measures to protect people, property,
and productive lands from flood losses where such measures are
justified and are the best means of avoiding flood damage.
"Land stabilization measures where feasible to protect land
and beaches for beneficial purposes.
"Drainage measures, including salinity control, where best
use of land would be justifiably obtained.
"Watershed protection and management measures where they will
conserve and enhance resource use opportunities.
"Outdoor recreational and fish and wildlife opportunity where
these can be provided or enhanced by development works.
"Any other means by which development of water and related
land resources can contribute to economic growth and development.
"Proper stewardship in the long-term interest of the Nation's
natural bounty requires in particular instances that -
"There be protection and rehabilitation of resources to insure
availability for their best use when needed.
"Open space, green space, and wild areas of rivers, lakes,
beaches, mountains and related land areas be maintained and used
for recreational purposes; and
"Areas of unique natural beauty, historical and scientific
interest be preserved and managed primarily for the inspiration,
enjoyment, and education of the people.
16
"Well-being of all of the people shall be the overriding deter-
minant in considering the best use of water and related land resources.
Hardship and basic needs of particular groups within the general
public shall be of concern, but care shall be taken to avoid resource
use and development for the benefit of a few or the disadvantage
of many," ±_
Understanding the Nature of the New River Basin Economy
A great deal of the land in the New River Basin is in a primary
state of development, (Plate l). A key to understanding the economy
of the Basin is to visualize the extractive nature of the significant
enterprises located there.
The earth yields many of the fruits of industry. Its products
may be vegetable in which case they are grown by men, perhaps using
machines. They may be of a long-term duration such as the tree
crops or of a short term such as field crops. Men are employed
from the planting until the final transformation in the area, be
it mulch or furniture. The animal yield may be exclusive of or
cooperative with other yields. All of these yields are rather
basic to man and close to his ancient heritage and habits, as are
many of the people who labor in this environment.
To introduce the concept of a highly industrialized culture
to the New River Basin as an imminent certainty would entail a
great deal of risk. If such a turn of events would transpire suddenly,
it would result in great social disorientation and turmoil with
which government would have to involve itself deeply
The New River finds its birth in hundreds of rivulets and
1_ Policies, Standards, and Procedures in the Formulation, Evaluation ,
and Review of Plans For Use and Development of Water and Related
Land Resources . The President's Water Resources Council, GPO,
1962, page 12.
17
APPROXIMATE DISTRIBUTION OF LAND
NEW RIVER BASIN
I960
(EXCLUDING WATER AREAS)
LEGEND
2% URBAN
12% CROPLAND
31% PASTURE
55% FOREST
DIVISION OF WATER RESOURCES
SC.
DATE 12-6-66
SHT.
DE. A24
DR. C.H.N.
APP
REV.
OF. I
NO.
PLATE NO. 1
tiny streams in North Carolina. It flows north across Virginia
and eighty-seven miles inside West Virginia it joins the Gauley
River to become the Kanawha River which eventually empties into
the Ohio River.
The New River enters Virginia near Mouth of Wilson community
in Grayson County, Virginia. Fields Manufacturing Company has
a fabric mill on the River near the State line. New River runs
from southwest to northeast through Grayson County. The land area
between the entrance point at Mouth of Wilson to Fries has a rough
terrain. Plots of level land suitable for large plant sites are
few. However, marginal plant sites are available.
The River crosses the northwest corner of Carroll County.
Nearby is the City of Galax. Industries in Galax include furniture
and textile manufacturing. The land area between Galax and Fries
contains both industrial and recreational sites. There is no heavy
industry in this area at present. The town of Fries has a fabric
plant, Washington Mills, which employs nearly a thousand people.
The area between Fries and Claytor Dam supports large industry
such as New Jersey Zinc Company. Appalachian Power Company maintains
two hydroelectric plants between these two points. Land is available
for industrial sites in the region between Fries and Claytor Dam
near the Wythe-Pulaski County line in the vicinity of Foster's
Falls and Graham's Forge. The land in this vicinity is ideally
situated to the main line of the Norfolk and Western Railway and
also to Interstate Highway No . Gl, U. S. Highway No. 11, and other
secondary roads.
The largest complex of industry is located between Claytor
19
Dam and Parrot community in Pulaski County. A concentration of
industry is located in the Radford-Radford Arsenal Complex. A
large measure of available land lies along State Highway No. 100
between Dublin and Pearisburg. Land to the northeast of State
Highway No. 100 is well suited for industry. Highway No. 100 roughly
parallels the River's course but does not meet with the River until
leaving Pearisburg. This area is readily accessible to main line
railway transportation, but there is definite need for additional
h i ghways .
New River flows through the center of Giles County in a north-
westerly direction. Celanese Fibers, a subsidiary of Celanese
Corporation of America, is located between Pearisburg and Narrows
on the New River, Celanese has the greater share of employment
in Giles County. Limestone quarry operations and non-metallic
mineral operations constitute most of the remaining industrial
employment- Appalachian Power Company operates one of its large
steam electric generating plants on the New River at Glen Lyn
This plant supplies power to markets which are interconnected with
Appalachian's interstate system.
Population estimates (Chapter IV) suggest moderate growth
through the year 2020 with a definite lag in development of ten
to fifteen years in comparison with other burgeoning areas of the
State. This lag could be negated or modified if a development
impetus is given by regional planning and resource utilization.
(See "Growth Series," Chapter IV.)
The New River Basin, with its clean water, offers excellent
possibilities as an interstate recreation area. Increased highway
20
and airport development, coordinated with long-range planning efforts,
could establish many employment opportunities within the Basin
area. Electronic, chemical, metal fabricating, production, and
assembly facilities and advanced consumer products could be effectively
introduced into the New River Basin, There is a distinct tie-
in with West Virginia as well as the Atlantic Coast market areas.
Industrial development is pronounced in the Pul aski -Radford-
Glen Lyn belts and future development will take place in this area
with location along the banks of the New River causing increased
demand upon the water resources. This belt will be designated
as the area of primary growth. Location on the banks of the New
River above Radford is expected to be limited to industries which
need the River's water for production or allied purposes or which
desire a scenic overview or natural land boundary.
Future highway and transportation location will be a determining
factor in industry location along the banks of the New River. Pre-
served forest land, military complexes, and adverse accessibility
coupled with mountainous terrain will probably limit potential
industrial growth along river banks in some areas. On the other
hand, development of parts of the New River and its banks along
a recreational "clean water" concept will insure continuance of
its good water supply for population and industry. The river development
program is a crucial factor in industrial development within the
entire Basin including the Pu laski -Radford-Gl en Lyn belt. A consumer
products-oriented river bank may be expected and should be planned.
Future growth of residential housing above the flood plain along
river banks should be planned and encouraged. Recreational facilities
21
may include those for fishing, boating, golfing, picnicking and
opportunities for sports of many other types.
3ridge location to insure quick and convenient access between
communities and still preserve the natural beauty of the River
should be explored. Productive facilities which have a high social
utility will enhance the water resources of the area. Some of
these may presently be considered as "exotic" industries working
in advanced technologies. Drug firms would make an excellent starting
point for the inducement of research and development.
It is also possible that the concept of recreation may expand
from its present limits to include more social participation than
individual activity. Whole new areas of river, lake and basin
recreation would be open to public participation. Planning will
be necessary to insure adequate private freedom to accomplish these
innovations The way must be partially paved for these developments -
All approved water resource development projects should have flexible,
guaranteed, and farsighted recreational development soundly coupled
to the needs and demands of the area itself. The technology of
the future will create more leisure. Natural beauty should not
be erased.
A socially acceptable mix of benefits and liabilities of all
future industrial and recreational developments can be achieved.
Recreation is not enough to develop the New Basin, but development
without emphasis on enhancing the recreation potential of the area
is also not enough.
22
CHAPTER IV
POPULATION PROJECTIONS
Population is an important indicator and factor in economic
growth. In order to establish some concepts of future activity
and development within the New River Basin, it is necessary to
set some possible and probable parameters for the Basin.
Plate 2 describes population projections in the New River
Basin which were developed by engineering staff. The percent increase
projections are self-explanatory; they assume constant increase
at the given rates. The component method is based upon the increase
suggested by relationships derived from the projection of Gross
Manufacturing Output. Table 12 presents this projection in tabular
form.
These relationships are induced and are subject to change
by growth. Alternative population projections are possible in
our framework of analysis.
The comparison method is derived from modification methodology
with parameters from a basin study which is viewed as analogous
to the New River Basin.
Counties having all or part of their area within the New River
Basin show the following percent of population change for the period
1950-1960 (the Statewide increase was 19-5 percent):
Bland County - 7%
Carrol 1 County - k%
Craig County - 3%
Floyd County - 8%
Gi les County - S%
23
600 r
500
400
300
o
o
o
3
Q-
O
0.
200
POPULATION PROJECTIONS
NEW RIVER BASIN IN VIRGINIA
965-2020
100
— i 1 —
1965 1970 1975
— i 1 1 1 1 1 1 1 1
1980 1985 1990 1995 2000 2005 2010 2015 2020
YEAR
BASED ON 2 0% ANNUAL INCREASE
BASED ON 1.0% ANNUAL INCREASE
BASED ON 0.5% ANNUAL INCREASE
BASED ON COMPONENT METHOD
BASED ON COMPARISON METHOD
DIVISION OFWATER RESOURCES SC
POPULATION PROJECTIONS N.R.B.
1965- 2020
DE.
DATE 2-3-67 SHT. I
DR. C.H.N
APR
REV.
OF
NO. C 34
PLATE NO. 2
2^
TABLE 1
POPULATION PROJECTIONS
Component Method
NEW RIVER BASIN
I960 - 2020
I960 1965 1970 1980
180,000 185,000 200,000 215,000
1990 2000 2010 2020
250,000 267,000 308,000 3^1 ,000
25
Grayson County - 7%
Montgomery County + 11%
Pulaski County - 2%
Smyth County + 3%
Tazewel 1 County - 6%
Wythe County - 6%
Demographic studies seeking to establish population and related
growth include many components. Some of these components have
3
been presented in tabular form in The American Economic Review —
and are listed below:
Popul at ion Labor Force Househol ds
1. Mortality rate Mortality and aging Mortality and aging
2. Net immigration rate Net immigration Net immigration
3. Fertility rate Labor force partici- Household headship rate
pation rate
Of particular importance in the component method of population
projection is an analysis of the interaction of economic factors,
A detailed demographic analysis could not be made in the context
of this report. The projection of Gross Manufacturing Output pre-
sented on Table 12 is the base for projection of shifts and rates
of population growth in the New River Basin. Movement between
rates of population growth as shown on Plate 2 are not ruled out
but are implicitly assumed in projections of future employment
and Gross Manufacturing Output. In the basic economic analysis
one rate of constant population growth is not adopted in preference
to another. People tend to live near their work. Population,
in this context, is a function of GMO (Gross Manufacturing Output).
P <b GMO
3_ "Economic-Demographic Interactions and Long Swings in Economic
Growth". Richard A. Easterlin, The American Economic Review
Volume LVI, December 1966, page 1078.
26
GMO is a function of the regional or basin share of the labor force
(L), Gross National Product (GNP) , Productivity (Pd) , and all types
of Capital (K) .
GMO 4> L + GNP + Pd + K
Mathematical analysis of these functions is too primitive
to be extensively applied. A sophisticated model relating these
functions would be amenable to computerization. In these projections,
the demographic elements of population have been "slighted" in
order to meet the need for immediate and useful economic data.
In order to look at possible future population combinations
within the Basin, it has also been necessary to approach a very
difficult goal, projection of populations of counties and segments
of counties to the year 2020. Utmost caution should be exercised
in the use of such projected populations. They may best be considered
as benchmarks "measuring possibilities" rather than as goals in
planning. They have been arrived at by random simulation and fitting
techniques. This is the present state of this particular art.
Tables 2 through 5 present four complete series,
"Benchmark"
Series A Engineering (Constant Growth) Projection of Inter-County
Segments of Population in the New River Basin 1380-2020
"Benchmark"
Series B Random Simulation (Possible but not Probable) Projection
of Inter-County Segments of Population in the New River
Basin 1980-2020
"Growth"
Series A Engineering (Constant Growth) Projection of Inter-County
Segments of Population in the New River Basin 1980-2020
"Growth"
Series B Random Simulation (Possible but not Probable) Projection
of Inter-County Segments of Population in the New River
Basin 1980-2020
27
The "Benchmark Series A" above contains population figures
for each major political subdivision in the Basin, The total population
for the Basin as projected by "Benchmark Series A" is similar to
the "component method" projection previously indicated. The breakdown
of individual political subdivision populations in the "Benchmark
Series A" is considered to be the best estimate of future population
by the Division of Water Resources. Estimates of total population
in the Basin by either the component method or "Benchmark Series
A" are considered to be equally valid. Plate 3 indicates graphically
the "Benchmark Series A" projections.
Some comparison of growth in Virginia and the Nation can be
obtained by comparing projections for the New River Basin with
the growth patterns for Virginia and the Nation shown on Plates
3, / », and 5-
Tables 6 through 9 contain projected population densities
for the New River Basin based upon the various future population
estimates previously outlined.
Past population densities in the United States are shown in
Plate 7.
28
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32
"3ENCHMARK" SERIES A
POPULATION PROJECTIONS
NEW RIVER BASIN IN VIRGINIA
1980-2020
60 -
55 -
50 -
"/
45 -
u, 40-
_i
Q.
S 35-
Q.
1 1
o 30 -
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15 -
10 -
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5 ■
SMYTH COUNTY ^k
CRAIG COUNTY j
o -J
19
80
1 1
2000 2020
YEAR
DIVISION OF WATER RES
"benchmark" SERIES
.OURCES
SC.
DATE 4-5-67
SHT. 1
OF 1
A
POPULATION
DE.
DR. M.N. F.
A PP.
REV.
NO. A 77
PLATE NO. 3
33
16
12
8
VIRGINIA'S
POPULATION
1940-2020
14,000,000
kl
_l
a.
o
U
a.
u.
. o
9,000,000
CO
z
o
-1
_l
2
6,000,000
"3,966,949
1940 1950 I960
1980
YEAR
2000
2020
SOURCE : VIRGINIAS COMMON WEALTH, 1965
VIRGINIA OUTDOOR RECREATION STUDY COMMISSION
DIVISION OF WATER RESOURCES
SC.
DE.
DATE 4-14-67
DR. C.H.N. APP
SHT
REV
OF
NO. A 81
PLATE NO. k
34
POPULATION PROJECTION- STATE OF VIRGINIA
1970-2020
♦assumed annual
growth rates
MEMO 3/9/67 JOHN L. KNAPP a "1980 PROJECTION OF
POPULATION AND EMPLOYMENT FOR THE STATE OF VIRGINIA-
PROVISIONAL ESTIMATES RESEARCH NOTE NO. 3 . DIVISION
OF PLANNING (FEBRUARY 1967) PP 4,8 AND ASSUMPTIONS
CONTAINED IN THIS MEMORANDUM.
4
1970
1980
1990
2000
2010
2020
YEAR
DIVISION OF WATER RESOURCES
POPULATION PROJECTION V*
DE.
SC.
DATE 4-27-67
DRC.H.N.
APR
SHT. I
REV.
OF
NO. A86
PLATE NO. 5
35
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DIVISION OF WATER RESOURCES
POPULATION PROJECTION
UNITED STATES
sc,
DE.
DATE 5-1-67
DR. C.H.N.
APR
SHT
REV.
OF
NO. A87
PLATE NO. 6
36
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37
DENSITY OF POPULATION
UNITED STATES
POPULATION
YEAR
PER SQUARE MILE OF
LAND AREA
I860
10.6
1870
13.4
1880
16.9
1890
21.2
1900
25.6
1910
31.0
1920
35.6
1930
41.2
1940
44.2
1950
50.7
I960
50.5
U.S. DEPT. OF COMMERCE
BUREAU OF THE CENSUS. JUNE, 1961
DIVISION OF WATER RESOURCES
DENSITY OF POPULATION
UNITED STATES
sc
DE.
DATE 4-7-67
DR. C.H.N.
APR
SHT.
REV.
OF
NO. A-80
PLATE NO. 7
38
CHAPTER V
EMPLOYMENT PROJECTIONS
Plate 8 shows the percent of the labor force employed in 1 966
in sectors of manufacturing in Bland, Pulaski and Wythe Counties
(upper chart) and the percent of the labor force employed in the
various sectors of the economy of these three counties in 1966
( lower chart) .
Special note should be made of the inclusion of only full-
time operatives in the Agriculture, Forestry and Fisheries sector
from 1970 onward as illustrated in Table 10. The 1 960 figure includes
some part-time operatives, particularly in Agriculture. Thus,
these projected figures do not really indicate any significant
drop in full-time agricultural employment. However, increases
in productivity, which are expected, will be reflected in improved
technology rather than increased manpower.
The phenomenal growth in the construction industry assumes
heavy private and government spending to transform the Appalachian
Region, which includes sections of the New River Basin, into a
vigorous competitor for the Nation's industry. Some of these workers
may be employed outside the Basin for certain periods. Enhanced
mobility is predicted for this type of employment.
Manufacturing employment is viewed as significant but of more
stable growth.
The transportation, communication and utilities section is
expected to experience great technological change, but an increase
39
PERCENT OF LABOR FORCE EMPLOYED
BY SECTORS
BLAND, PULASKI a WYTHE COUNTIES
\ MANUFACTURING /
Aw MANUFACTURING
/ ALL\^
36.2%
/ OTHER ^\.
^^""SELF-
7.9%
-^"EMPLOYED
CONSTRUCTION^,
domestic a
unpaid family
\workers
\^---s1rvices/
\I4.9%
\ 5.6%/
\ /GOVERN -
V/ MENT
/agri-\
/culture
TRADE ^\
10.6 % ^
\ 98%
/ 10.0%
\ ALL SECTORS /
SOURCE: VIRGINIA EMPLOYMENT COMMISSION, 1 966
DIVISION OF WATER RESOURCES
PERCENT OF LABOR
FORCE
SC.
DE.
DATE 2-9-67
DR. M.N. F.
APR
SHT.
REV.
OF
N0.A36
PLATE NO. 8
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in services provided is expected to call for more employment.
The expansion of wholesale and retail trade employment and
finance, insurance and real estate employment requirements is viewed
as supportive to the general growth of the region.
The expansion of personal and business services is viewed
as the extension of a projected National trend resulting from techno-
logical and financial changes expected in the future. This sector
is also supportive.
The expected future nature of the economy of the New River
Basin suggests a significant increase in the number of employees
of all types of government.
^2
CHAPTER VI
INDUSTRIAL OUTLOOK IN THE NEW RIVER BASIN
Employment in the New River Basin population was approximately
75,000 in 1965. Manufacturing employment is approximately 28,000
people. Since federal agencies use United States Census data,
it is apparently better for our need to use that data as a primary
source, updated and projected to reflect state data.
The big employers in the Basin are the lumber and furniture
sectors, the apparel sector, the textile sector, chemical sector,
and stone, clay and glass sector.
Value added ranks merely express those industries which
contribute the most value added in absolute dollar terms. Estimated
future value added for various industries is shown in Table II,
As an aid in understanding the concept of value added, an explana-
tion of the term is shown on page 48.
Total Value Added Ranks for These Sectors
Chemical and allied Rank 1
Textiles and apparel Rank 2
Lumber and furniture Rank 3
Stone, clay and glass Rank 3-5
Related Land Resource Development Pattern
Industrial belts appear to be strengthening along highway
corridors from Pulaski to Radford. Radford to Glen Lyn appears
to be the direction of additional growth from this primary corridor.
It would not be surprising to see additional growth, as the spokes
of a wheel, from Radford to other contiguous communities. The
43
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Radford-Glen Lyn corridor appears most likely to have heavy industry
along the banks of the New River. It is not likely that there
will be mass location of plants along the River in preference to
the Pul aski -Radford corridor. Light research and development industry
can be expected to locate in or near the corridor possibly using
the scenic aspects of the river bank. Textile, chemical, and metal
industries can be expected to locate along the lower corridor with
access to river, rail, and truck facilities.
The improved transportation network will have effects upon
agriculture, the exact extent remaining to be seen.
The banks of the River serve primarily agricultural uses especially
in areas which are flood plains. Flood damage is minimized by
the use of these areas for grazing. It is unlikely that heavy
industry will select New River bank location upstream from the
Claytor Lake area. In fact, it is possible that an existing industrial
site may be vacated before a comparable one will be located along
the banks of the Upper New River.
Recreational possibilities, seen from the agricultural viewpoint,
are limited in their economic impact on the area. The area already
enjoys good hunting, and it is unlikely that this could be signi-
ficantly augmented by further development. Fishing is a selective
sport which has been influenced by man-made changes in the River's
economic environment and ecology. It is possible that the River
itself is already too developed in spots to take advantage of all
its natural value. The River is not so large that planning efforts
to secure immediate social profit from its flow alone would not
be beneficial. A great value probably lies in keeping segments
^5
of it as dose to Nature as possible. Industrial development should
be extended to the land areas of the Basin which are most desirable
for this use. Available labor and a pleasant location are among
the primary attractions for industry.
Growth Belts, New River Basin
Plate 9 indicates three growth areas in the New River Basin
These areas are not meant to be all-inclusive or al 1 -excl us i ve
but rather to indicate trends in Basin growth.
The area of primary growth is related to the area of secondary
growth upon which it draws for some of its resources. The area
of secondary growth is likely to attract a variety of industry
which may affect water use.
The area of tertiary growth presents an interesting paradox
since it is related more to the area of primary growth than to
that of secondary growth. It also seems to have significant potential
attraction to clean, light industry and business. Transportation
routes are excellent here, and there is good reason to anticipate
a growth which could exceed that of the previously favored areas
of primary and secondary growth. This growth will probably be
more selective and better suited to the character of the area than
growth patterns in the area of primary growth.
The growth areas show potential industrial demand, in a time
sequence ranking, upon water resources in the New River Basin.
Attractiveness and ultimate growth by the most desirable mixes
of industry are another matter, as has been pointed out.
We should also point out that the word "industrial" is being
used here in a limited sense to accommodate all significant business
^6
GROWTH BELTS
NEW RIVER BASIN
L_ZJ primary growth
U1LU SECONDARY GROWTI-
TERTIARY GROWTH
NATIONAL FOREST
L
STATUTE MILES
DIVISION OF WATER RESOURCES
GROWTH BELTS
SC. BAR
DE
DATE 11-14-66
DR. C.H.N.
APP.
SHT I
REV.
OF
NO. B 20
PLATE NO. 9
hi
enterprises - not necessarily industry in the traditional sense.
We are excluding power and utility operations. Educational institutions
should be viewed as growing along with this industrial trend,
A brief resume of the outlook for several selected industrial
classifications in the New River Basin follows. These industries
are expected to have considerable impact on the water resource
in the future.
Experimental Value Added Extension
" Value Added by Manufacture - Value added by manufacture is
derived by subtracting the total cost of materials (including materials,
supplies, fuel, electric energy, cost of resales, and miscellaneous
receipts) from the value of shipments (including resales) and other
receipts and adjusting the resulting amount by the net change in
finished products and work-in-process inventories between the beginning
and the end of the year.
"Value added avoids the duplication in the value of shipments
figure which results from the inclusion of the shipments of establish-
ments producing finished products. It does not exclude, as described
in the paragraph below, purchased services. Nevertheless, it is
considered to be the best value measure now available for comparing
the relative economic importance of manufacturing among industries
and geographic areas.
"Value added by manufacture should not be confused with 'national
income originating in manufacturing,' as presented in the national
income by industrial origin estimates compiled by the Office of
Business Economics (OBE) , Department of Commerce. The latter measure
is the sum of factor costs incurred by an industry in production
and is, therefore, a more 'net' concept of value added than that
used in the census of manufactures. 'income originating' excludes,
in addition to cost of materials, such other costs as depreciation
charges, State and local taxes (other than corporate income taxes),
allowance for bad debts, and purchases of services from nonmanufactur i ng
enterprises such as contract costs involved in maintenance and
repair, services of development and research firms, services of
engineering and management consultants, advertising, telephone
and telegraph expense, insurance, royalties, patent fees, etc.
"In part, the national income originating estimates are prepared
from company rather than establishment data. This method results
in the inclusion of some part of the net value added by nonmanufactur ing
establishments of companies classified as being primarily manu-
facturing and, conversely, in the exclusion of some part of the
net value added by manufacturing establishments of companies classified
k8
as primarily nonmanufactur ing. It is believed that for manufacturing
as a whole the net effect increases income originating. (In fact,
in the Petroleum and Coal Products major industry group, nonmanu-
facturing activities of manufacturing companies are so significant
that this is the one major industry group in which OBE 'income
originating 1 exceeds Census 'value added by manufacture.')" ^_
Chemical and Allied Industries
For the foreseeable future, the greatest water demand on the
New River will be by chemical users. The projected growth of the
chemical industry is, therefore, very important in any consideration
of water resource development in the Basin. Plate 10 illustrates
the present location of the chemical and allied industry in the
New River Basin. A graph of the projected increase in output of
the chemical and allied industries is presented as Plate 11. This
dollar volume of output does not suggest an increase in water use
exactly parallel to this increase in dollar amount; however, the
increase will be proportional. (See Plate 32.)
It should be realized that the chemical industry projection
really does not indicate phenomenal growth in numbers of industries
but rather in increased output. There will be periods of industrial
growth and periods of "slow-up" when technology (better machines
and production methods) outdistances the need for more labor. Much
depends on what happens elsewhere in the national economy - on
war and peace, on the type of government which we will have in
years to come.
The projections for the chemical and allied industries, Plate
11, suggest marked growth for existing industries in the New River
k_ 1963 Census of Manufactures, Virginia MC 63 (3) - ^7, U. S
Department of Commerce, Nov. 1966, Appendix Expl anat ion of
Terms, p. 29-
*»9
DIVISION OF WATER RESOURCES
MAJOR CHEMICAL
INDUSTRIES N.R.B.
PLATE NO. 10
50
900 -,
800 -
70 -
600 -
500
2 400 -
300
200 ■
100
GROWTH OF CHEMICAL AND ALLIED
INDUSTRIES OUTPUT
1960-2020
I960 1970 1980 1990 2000 2010 2020
NEW RIVER BASIN
DIVISION OF WATER RESOURCES
GROWTH OF CHEMICAL AND ALLIED
INDUSTRIES OUTPUT
sc.
DE
DATE 2-10-67
DR. C.H.N.
APR
SHI
REV.
OF
NO. B-37
PLATE NO. 1 1
51
Basin. The fascinating implications for a new plastics industry
in the Basin, in the light of future demand, can change the picture
and cause growth of an advanced nature.
Outlook for the Food Industry
in the recent past, the food sector of the economy has grown
more slowly than the growth rate for the Gross National Product.
Food consumption tends to be rather stable and adjusts to population
in a gradual manner. Progress In technology related to food production
has been of significant importance in shaping the present supply
curves for the food industry. There is little doubt that this
technology has led to an increase in general quality which has
tended to be more important in preferential use than the increase
in quantity, which is usually noted as the main result Centralized
or semi -automated (systemized) farming has resulted in some areas.
There are examples of these types of operations in the New River
Basin. However, there is not so exact a product selectivity as
to concentrate effort in this direction at the present time. The
meat industry should experience healthy growth in non-urban areas
as urbanization takes place in closer geographic proximity, thus
reducing transportation and middle-man cost. Naturally, integrated
food industries would have a wide geographic market and they would
be interested in transportation and servicing opportunities available
to them in their home location. Employment in this industry (see
projections, Table 10) is expected to favor women even more in
the future than at present. Automation is expected to facilitate
this trend. The growth of the industry in 1 980 is predicted on
a larger female employment. This employment is viewed as "compie-
52
mentary" to the employment in the textile sector of the economy.
The availability of new money and credit sources, external to the
area, is necessary for this development. Ready-made markets are
required. Until this time, there has been a localized approach
to the market in regions such as the New River Basin, augmented
by National producers and marketers. Diversification should induce
other industries with mul t i reg ional or national orientation to
form production and marketing units of the size which would be
amenable to the New River Basin. It still should be remembered
that we are not predicting a remarkable growth in this industry
in the New River Basin, but merely the introduction of newer types
of food industry operations in this area.
Outlook for Textile Mill Products
The textile industry in the South began to assume major economic
importance after the close of the Civil War. Changes in power
technology made operations more efficient in intervening years.
It was not until after World War II, however, that growth became
pronounced. Since World War II, the industry has more than doubled
in size in the Fifth Federal Reserve District (States of Maryland,
Virginia, West Virginia, North Carolina, South Carolina and the
District of Columbia)
The total number of establishments has risen from 38 in 1939
to 1,625 in I963, an increase of almost 1,750 percent. The total
number of employees climbed to 391,1^3 in 19&3 from 14,275 in '939,
an increase of 2,640 percent. Virginia had 39,100 employees engaged
in the textile mill products industry in 1965.
Textile products have been growing unevenly in the recent
53
past. Textiles have felt the impact of the technological revolution
ahead of many areas of the general economy. Thus, while certain
traditional sectors of the textile economy have grown at low rates,
others have grown very rapidly. Particularly important are processes
which make use of synthetic fibers. With wide consumer acceptance
and new developments which offer the promise of even greater break-
throughs, a high rate of growth is foreseen in the proximate decades.
Interestingly, employment in the textile industry in the New River
3asin, after growing steadily until 1990 (see Table 10), is predicted
to level off at approximately 7,000 workers. This prediction is
based upon a belief that technology will significantly increase
productivity in these years and that less general labor will be
required to support increased production.
We should not view the various types of fibers as absolute
"competitors," because, as Thomas Jeff Davis has said, "In interfiber
competition, no fiber is a perfect substitute for any other, but
all compete over a considerable range of uses," —
"The success of one fiber in securing for itself a larger
share of the total textile market depends upon factors which may
be considered as autonomous." 2.
"Consequently, it appears that only total fiber consumption
responds in any consistent way to external economic forces." 2.
Future consumer demands for textiles will probably shift to
the newer types for daily uses. Tradition will always retain a
5 Cycles and Trends in Textiles , Thomas Jeff Davis, Business and
Defense Services Administration, U, S. Department of Commerce,
Business and Defense Services Administration, 1958.
5k
significant market for the basic fibers in an ever- i ncreas ing base
population. The New River Basin is well suited to the production
and processing of newly developed fibers and already has a solid
history of participation in their growth.
Outlook for the Mineral Industry
Available information and projection techniques indicate that
the value of the mineral yield in the New River Basin was approximately
$18 million in 196^, A significant percentage of this was accounted
for by zinc and associated mining operations in Wythe County. Pro-
duction of coal in the Basin itself was limited. Some iron minerals
were mined for use as pigments. Stone, consisting of limestone,
dolomite, sandstone, and granite, was significantly quarried. Natural
gas is produced in Tazewell County.
In 1965, approximately 8 percent of Virginia's total aggre-
gate production had its origin in the New River Basin,
The aggregate industry is projected to grow at least at the
same rate as the total National economy in the coming decades.
All indications are that it will exceed that growth.
With the growth in construction activities and employment
(see Table 10) a marked growth in aggregate production in the New
River Basin is anticipated.
The Virginia Division of Mineral Resources has conducted studies
which provide detailed information regarding the mineral resources
and mineral production in the New River area.
Outlook for the Pulp and Paper Industry
Effective planning for future water resource needs involves
selection, by local interests, of the expected population of the
55
area for future years. Since this is a "developmental" type of
planning, this population can be chosen with a bias toward the
desired population in future years- Other measures to assist the
probability of such population must augment the approaches which
we have presented here. Each community will have to make its own
contribution in order to participate in the over-all economic growth
which as been predicted. A community which does nothing to make
the best use of available resources or, at worst, adopts a negative
attitude, cannot expect to grow at the regional rate.
In order to give some idea of one type of planning which is
contemplated, the location of a pulp and paper mill producing a
high grade of paper is postulated for an industrial site below
Radford but above Glen Lyn . The mechanics of securing this type
of location are not the proper concern of the water resource planner,
but a broader and more practical aspect of planning and industrial
development. Assuming that a pulp and paper mill would locate
in this area, what could be expected in terms of its size, its output
of paper and the number of its employees? Naturally, each particular
operation will be quite different. For planning purposes it is
assumed that a pulp and paper industry having the capacity indicated
on Plate 12 will locate in the Basin,
Capital Investment Required . Estimates of capital investment
required to establish a totally integrated, high-quality pulp/paper
mill (with an ultimate 900 ton per day paper output) in the New
River Basin range from a low figure of $90 million to a high figure
of $1^ mi 1 1 ion .
56
PROJECTED TONS PER DAY
PAPER PRODUCTION (HIGH GRADE)
NEW RIVER BASIN
1,000-
1980-2020
900-
800-
< /
Q /
700-
CL /
600-
CO /
o /
500-
400-
iOU1 i
1980 2000
i
2020
YEAR
START-UP 200 T. P. D.
DIVISION OF WATER RESOURCES
SC.
DATE 5-9-67
SHT. 1
OF 1
PROJE
CTED PRODUCTION
DE.
DR. M.N.F.
APR
REV.
NO.AIOI
PLATE NO. 12
57
Projected Gross Manufacturing Output
it should not be assumed that projections of Gross Manufacturing
Output will correspond with sales figures for any of the industries
listed. Gross output figures are obtained by standard methodology
employed by the U, S. Government in compiling national data. Disclo-
sure laws, differing methodology, and the present imperfect state
of the art of input-output analysis (which this projection attempts
to approximate without computerization) prevent the Government
from publishing figures which would have the absolute accuracy
of exact sales figures. This difficulty is compounded by the fact
that these figures have been assembled for many years on a national
rather than a regional basis. National trends and approximations
must be tailored with as good a fit as possible to local data.
Consequently, these projections should be viewed as they are derived.
They are the best presently capable of generation but will increase
in refinement with changes in the basic data, methodology and computer'
ization. They are value projections in 1 965 dollars. Their intended
bias is on the low, not the high side. A listing of actual and
projected gross manufacturing output is contained in Table 12.
The value of computerized input-output analysis of an area
the size of the New River 3asin, even if appropriate data were
available and formulae developed which could support such a program,
would be marginal. There would have to be a marked increase in
demand for such figures and a need for continual re-runs to give
a dynamic and valid use potential. Where these programs have been
used in industry, in limited trial situations, they have sometimes
generated more difficulties than benefits. This is an area in
58
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59
which we can expect much research and development to take place
before Government actually provides such services on a continuing
bas i s .
This should not discourage use of some of the methodology
which this research has generated, with the proper application
of knowledge and judgment.
"Gross Output" of an industry represents the sum of the values
of the following elements: (a) the total production by the industry,
including both primary and secondary products or services; (b)
the producers' value of the secondary products or services of other
industries which are primary to the given industry; and (c) the
domestic port value of imports which are distributed as part of
the output of the given industry." _
o "Survey of Current 3usiness," U. S. Department of Commerce, OBE,
November 196*4, p. 17.
60
CHAPTER VI I
GROSS NATIONAL PRODUCT
"A concept which has become practically a household word is that
of gross national product, or G.N. P. G,i>LP. is the market value
of the newly produced goods and services that are not resold in any
form during the year." L.
GNP is very useful as an indicator of economic activity on the
National level- It can also be useful as a point of comparison for
derived relationships which have immediate usefulness on the local
level. Specifically, it can be related to a regional account in
an analogous manner. Some of these relationships will be shown in
this volume. Particular attention is directed to Plate 13 in which
the relationship of State and Local Government purchases of structures
and equipment is compared with GNP-
Plate \k shows the historical trend of GNP while Plate 15
indicates one projection of future GNP, Plate 13 shows two sets
of points in the year 1975 relating to GNP, state and local government
spending, and the ratios of these two factors of the economy. Points
A and B are based on the following assumptions:
Assumpt i on A Assumpt ion B
An unemployment rate of 3% in An unemployment rate of
1975. 3-2% average annual gain k% in 1975-
in private production. A smaller gain in private
product i v i ty .
7 From Macro-Economics by Thomas F. Dernburg and Duncan F. McDougall,
Copyr i ght 1 9&0. McGraw-H i 1 1 Book Co., Inc. Page 3- Used by per-
mission of McGraw-Hill Book Co,
61
STATE AND LOCAL GOVERNMENT PURCHASES OF STRUCTURES
AND EQUIPMENT COMPARED WITH 6NP
Bil. 1958ft
1,000
z
bJ
3
O
UJ
(0
to
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cr
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3
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1947 49 51 53 55 57 59 61 63 65
75
Projection
RATIO OF STATE AND LOCAL STRUCTURES AND EQUIPMENT TO GNP
UJ
UJ
Q.
LU
<
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• .
YEAR
* l • - »■■■«■
i i i ii,
1947 49 51 53 55 57 59 61 63 65
75
Project ion
Note. Points A&B Are Reflections of Assumptions
A SB On Page
— 61 —
U.S. Department of Commerce, Office of Business Economics, 1966
DIVISION OF WATER RESOURCES
SC
DE
DATE 5-5-67
DR. M.N. F.
APR
SHT. I
OF
REV.
N0.AI00
PLATE NO. 13
62
o
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C\J
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—
DIVISION OF WATER RESOURCES
GROSS PRODUCT HISTORICAL
SC.
DATE 5-3-67
DR. C.H.N.
APR
SHT.
REV
OF I
NO. B 88
PLATE NO. ]k
63
2415
2250
2085.
1920-
1755-
1590-
1425-
1260-
1095-
930
765-
600
CO
UJ
CJ
cr
a.
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m
CO
cr
<
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z
o
1970
PROJECTED GNP 1970-2010
BILLIONS OF fl AT 1954 PRICES
SOURCE'OHIO RIVER BASIN COMPREHENSIVE SURVEY, VOLUME JET,
APPENDIX B PROJECTIVE ECONOMIC STUDY (1964)
1980 YEAR
1990
2000
"2010
DIVISION OF WATER RESOURCES SC.
PROJECTED GNP 1970-2010
DE
DATE 4-26-67 SHT. I
DR. C.H.N.
APR
REV.
OF
NO. A82
PLATE NO. 15
6^4
Source: State and Local Public Facility Needs and Financing . Study
prepared for the Sub-Committee on Economic Progress of the
Joint Economic Committee, Congress of the United States.
Volume I, Public Facility Needs, Washington, GPO, 1 966 .
Two series of implicit price deflators for GNP are presented
as Table 13 and Table 14. These deflators may be used to adjust
comparison of Actual and Projected GNP on different bases to common
years. Table 13 is a deflator which is related to personal consumption
expenditures for type of product. Table \k is a deflator which is
related to major type of product. Either one may be chosen, depending
upon the factor to which the user desires to devote most analytical
attention in his consideration.
Projection of Gross National Product
Projection of Gross National Product for periods far into the
future is full of hazards, A great many assumptions have to be
made regarding appropriate rates of growth and technological progress.
Economists are wary of extending a national indicator such as GNP
into an area in which many imponderables hold sway. There is no
presently existing system of accounts for State or Regional levels
which supply information akin to the National GNP, Data gathering
and analysis problems in the area of Regional Accounts are formidable.
It is usually assumed, however, that a healthy regional economy
will participate in about the same level of growth as the Nation
as a whole. It is possible that, were a regional account for the
New River Basin able to be presently developed, it would indicate
a "(Gross) Regional Output" in the ranges listed in Table 15- Table
16 contains basic assumptions for state and local public facility
needs and financing study. These basic assumptions relate to the
national or overall picture.
65
TABLE 13
Implicit price deflators for personal consumption expenditures
for type of product: Annually, 1 929- 65 • Index numbers, 1958=100.
Year
Deflator
1929
55-3
1930
53.6
1931
47-9
1932
42.3
1933
40.6
1934
43.5
1935
44.4
1936
44.7
1937
46.5
1938
45.6
1939
45.1
1940
45.5
1941
48.7
1 9A2
54.8
1943
59-9
1944
63.2
1945
65.4
1946
70.5
1947
77-9
Year
Deflator
1948
82.3
1949
81.7
1950
82.9
1951
88.6
1952
90.5
1953
91 .7
1954
92.5
1955
92.8
1956
94.8
1957
97.7
1958
100.0
1959
101 .3
I960
102.9
1961
103.9
1962
104.9
1963
106.1
1964
107.4
1965
108.9
66
TABLE \k
Implicit price deflators for gross national product by major
type of product. Index numbers, 1958-100.
Year
Deflator
1929
50.6
1930
49.3
1931
44.8
1932
40.2
1933
39-3
1934
42.2
1935
42.6
1936
42.7
1937
44.5
1938
43.9
1939
42.2
1 940
43.9
1941
47.2
1942
53.0
1943
56.8
1944
58.2
1945
59.7
1946
66.7
1947
74.6
Year
Deflator
1948
79-6
1949
79-1
1950
80.2
1951
85.6
1952
87-5
1953
88.3
1954
89.6
1955
90.9
1956
94.0
1957
97-5
1958
100.0
1959
101 .6
I960
103.3
1961
104.6
1962
105.8
1963
107.2
1964
108.9
1965
1 10.9
67
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68
TABLE 16
NATIONAL PROJECTIONS
BASIC ASSUMPTIONS FOR STATE AND LOCAL
PUBLIC FACILITY NEEDS AND FINANCING STUDY
Actual Assumed
Factor 1 96I -65 1966-75
(Percent) (Percent)
A. Annual rates of Increase:
1. Population 1.5 1.5
2. Gross national product 5-9 5-5
3- Personal Income 5.6 5-2
k. Gross private domestic fixed investment - 4.9 4.5
5- Employed civilian labor force 1.6 1.9
6. Gross national product deflator 1.5 1-5
7- Wholesale price index .8 -.5
8. Boeckh construction cost index 2.5 2.0
9. Index of industrial production 5-6 5-0
10. Money supply 3-3 3-0
11. Selected liquid assets held by public 7-2 6.5
B. Annual rates of:
12. Civilian unemployment 5-6 4 .0
13- Savings as a percent of disposable income- 5-6 5-5
C- Other parameters:
14. Capacity utilization o* industry 85-6 90.0
15- Average Federal budgetary deficit:
National Income budget (billion) -$2.4
Cash budget (billion) -$4.1
SOURCE: State and Local Public Facility Needs and Financing.
Vol. I, Subcommittee on Economic Progress, Joint Economic
Committee, Congress of The United States, U.S.G.P.0. -
Washington, I966, P. 22.
69
CHAPTER VI I I
TRADE IN THE NEW RIVER BASIN
Trade is an important element in economic development. Federal
disclosure laws governing the publication of certain data limit
the amount of information available concerning the wholesale trade
in the New River Basin. The amount of information which is lacking
is not considered to be crucial.
In I963, the latest year for which data is available, wholesale
trade sales amounted to $65,000,000 in the New River Basin, Retail
sales were $165,000,000. These figures suggest the opportunity
for the establishment of a wholesale distribution center somewhere
in the New River Basin. Counties and cities within the New River
Basin are ranked below from highest to lowest dollar volume of
total retail trade sales (in 1963).
Pulaski County
Wythe County
Gi les County
Montgomery County-
Gal ax City
Radford City
Tazewell County **
Carrol 1 County
Smyth County **
Grayson County
Floyd County
Bland County *
Craig County *
- Portion within New River Basin Only.
** Portion influenced by New River Basin Only.
Wythe County and Galax City head the wholesale trade list
in 1963. Available information regarding the wholesale trade indicates
70
the following ranking (in I963):
Wythe County
Galax City
Tazewel 1 County **
Smyth County **
Pulaski County
Radford City
Montgomery County
Gi les County
Carrol 1 County
Floyd County
No information is available for the following counties because
of disclosure laws.
31and County
Craig County
Grayson County
** Portion influenced by New River Basin Only.
71
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72
CHAPTER IX
REGIONAL ACCOUNTING AND FLOWS OF MONETARY INFLUENCE
The plate appearing on page ~Jk t Flows of Monetary Influence,
(Plate 16) is important to an understanding of much of the analysis
appearing throughout this volume. When capital needs for the future,
rates of interest and future government and private investment
in public goods are referred to, it is assumed that the principles
noted on this plate have been grasped. There are definite flows
in the way money influences and is influenced. These flows have
important effects on everyday life, especially its business aspects.
Of equal importance to this study is the "world" which is
being examined. That "world" here is the physical New River Basin,
quite different from the idea of a unit of all the counties which
have a part in the New River Basin. In some instances, only a
small part of a county is included by Nature in this Basin. In
other instances, half of a county or its entirety is included.
This "world" of the New River Basin (as a part of the United States)
could be expressed, in economic terms of "Gross Basin Product,"
as fol lows :
Y=C+lg+G+ (X-lm)
Y = Gross Basin Product
C = Consumption
Ig = Gross Business Investment
G = Government Spending
Im = Imports
X = Exports
The use of a formula like this to analyze the New River Basin
would be an ideal way to obtain much useful information. There
73
FLOWS OF MONETARY INFLUENCE
FEDERAL RESERVE AUTHORITIES
1
Admin i ster
w
w
u
RESERVE REQUIREMENTS
OPEN MARKET OPERATIONS
DISCOUNT RATE
I
1
Which influence
I'ATUP.ITY DISTRIBUTION
OF OUTSTANDING DEBT
Wh i ch may
affect
Which stronqly affect
AVAILA3ILITY OF
BANK CREDIT
Which, together with
INTEREST RATES
i n f I uences
Which strongly affect
TOTAL BANK
REStRVES
Which, along with interest
rates, affects the "ues i red"
I
Which may |
temporar i I y
influence 'actual
\ I
\ I
±1.
i
(Reserve Positions of Banks)
EXCESS RESERVES
BORROWING
Which mainly determine
MONEY SUPPLY
Which, in interaction
with the demand
for money, affects
Whi ch, along wi th
the discount rate,
affect the "desired"
PRIVATE SPENDING FOR CONSUMPTION AND INVESTMENT
Which effects
PRODUCTION, EMPLOYMENT, PRICE LEVEL,
AND BALANCE OF PAYMENTS
SOURCE: FEDERAL RESERVE BANK OF ST. LOUIS, lyoS
DIVISION OF WATER RESOURCES
FLOWS OF MONETARY INFLUENCE
sc.
DE.
DATE 3-20-67
DR
APR
SHT. I
REV.
OF
NO. 43
PLATE NO. 16
7h
are several significant difficulties which presently cause us to
use modified methods of analysis. A few of these are: Data for
X and im, as well as for other variables, are not assembled with
regularity for Basin areas the size of the New River Basin, Th i s
is a statistical assembly problem which requires additional consi-
derations as to the cost of such assembled data versus its value.
Computerized solution of the model would be necessary in order
to test the accuracy of its inputs, Of course, the most important
reason why this model is not adapted to our analysis of the New
River Basin is the time limits which are necessary in order to
accomplish river basin analyses so that they may be provided to
users when needed.
Flows of Monetary Influence
An understanding of flows of monetary influence is essential
to the economic analysis of the New River Basin, If the concept
of money and credit analysis is not employed, only a broad picture
of the Basin and its future would be possible. But money and credit
are very significant in the decisions of the people of a region,
In migration and out-migration many people are significantly influenced
by the quantity of money and credit available. There are certain
basic economic laws which regulate the world of money and credit.
In the United States, the structure can be looked at as the T re asurv
and Federal Reserve System, which both influence money and credit
on the National level, and the commercial banks, both National
and State, which reflect these influences on the local level. The
monetary system is an umbrella covering all sectors of fmancia 1
transactions. Directly or indirectly, nearly every one deals with
75
or is affected by banking institutions. Industry, commerce, government,
and social institutions are predicated on the monetary system.
This is a fact of life which cannot be overlooked in the development
of an area or in appraising society's indebtedness to the banking
institutions. In them is to be found the prime impetus to economic
growth .
Considering the Treasury as the proper agent of the Govern-
ment's fiscal policy, the Federal Reserve should be considered
as the proper instrument of monetary policy. Through a complex
mechanism which is graphically illustrated by Plate 16, the Federal
Reserve System can affect the general flow of money and credit
as economic conditions change. The Federal Reserve System cannot
assure favorable economic conditions by itself. it must operate
within existing banking and credit channels. The other forces
affecting the total flow of credit in the economy include government
expenditure policies, taxes, debt policy, the existing distribution
of income, and the allocation of income between consumption and
saving, the position of labor and management, agriculture and other
sectors of the economy, prospects for war or peace, and business
and consumer expectations as influenced by prices.
"As we have seen, the money system is man made. Invented
by man, revised by man, and controlled by man; it is as Abraham
Lincoln said, 'the creature of law'. Therefore, there is no reason
to conclude that the system is perfect." Page 119, "A Primer on
Honey"; Subcommittee on Domestic Finance Committee on Banking and
Currency, House of Representatives, 88th Congress, Second Session,
Washington, G.P.O. 196*4.
76
Thus it is that such things as discount rates, rates of interest,
and other methods (or results) of monetary policy influence the
New River Basin's private spending for consumption and investment,
which affects production, employment, price level both within and
outside of the Basin and, of course, even the Balance of Payments.
The Federal Government has been following a policy of stimulating
economic growth within the Nation and especially within certain
regions, such as the Appalachian Region, which are viewed as growing
more slowly than the Nation as a whole. Fiscal and monetary policy
are the tools which the government can use to selectively influence
a region. The effects of the application of monetary and fiscal
policy on the growth of a region should not be either underestimated
or overestimated. Broadly, an increase in the money supply of
a region, with proper interaction on the part of the region itself,
can have beneficial effects in commencing a new level of growth
which can become self-sustaining. The important element here is
that the region be prepared to make use of the expected increase
for a growth that is in its own best interests. This preparation
marks the most successful growth areas in contradistinction to
those which have grown by chance. It is important to remember
that each time National growth is stimulated by fiscal and monetary
policy, growth opportunities are opened to a region.
77
CHAPTER X
PERSONAL INCOME IN THE NEW RIVER BASIN
Lord Keynes has stated that "The amount that the community
spends on consumption obviously depends (1) partly on the amount
of its income, (2) partly on the other objective attendant circumstances,
and (3) partly on the subjective needs and the psychological propensities
and habits of the individuals composing it and the principles on
which the income is divided between them (which may suffer modification
n
as output is increased)" —
Although it is difficult to show a significant correlation
between per capita personal income and water use or water resource
development, it can generally be stated that increased per capita
personal income should lead to increased water use-'- Personal water
use should increase with a better standard of living, involving
more recreation and comfort. Per capita income is viewed as a
handy index to gauge the economic growth patterns of an area.
Plate 17 illustrates per capita income in the United States
in terms of 1058 dollars. Plate 18 shows per capita income in
the United States in terms of the current dollars at the periods
of time indicated, Plate 19 shows graphically past per capita
0_ The General Theory of Employment, Interest, and Money . John
Maynard Keynes, Harcourt, Brace and Co., New York, I960, pp. 90, 91
•'•' For theory relating to this field, cf. "The Impact of Price on
Residential Water Demand and Its Relation to System Design and
Price Structure", by Charles W. Howe and F. P. Linaweaver, Jr.,
Water Resources Research, Vol. 3, No. 1 ( 1 367) pp- 13-32.
78
personal income in Virginia and projected income to the year 1 970 .
Plate 20 illustrates the 1 960 per capita income of counties and
cities in the New River Basin- Plate 21 contains "Benchmark" per
capita income projections for the New River Basin while Plate 22
shows "Benchmark" per capita income projections for the Appalachian
area of the New River Basin„ Plates 23 through 28 illustrate historica
growth in per capita income for the counties in the Basin,
The 1965 estimate of personal income by county for Virginia
is now being prepared by the Bureau of Population and Economic
Research of the University of Virginia at Charlottesville,
79
CO
<
co
Q
UJ
H
in
<£ UJ
or o
< o
Is
< <
CO
z or
O UJ
o a.
SdVTIOa 8Q6I Nl 3W0DNI
£66
? 8 £
8 o
CM — O 00 s (O in t
OJ cvj CM
OOOQQOqO QOO
oooooo5o ooo
2 cvj - o a> co
o
CD
CD
in
l-s
r*-
IT)
CD
cf)
lO
m
l-s
ro
in
CM
m
in
r8
CO
in
to
<*-
CM
O
fro
<
UJ
>-
DIVISION OF WATER RESOURCES
US CONSTANT DOLLAR
DE.
SC,
DATE 4-26-67 SHT I
DR. C.KN.
APP
REV.
OF
NO. A83
PLATE NO. 17
80
2400-.
2200-
2000-
1800-
1600-
1400-
1200-
1000
400
200-
UNITED STATES
CURRENT DOLLAR
PER CAPITA INCOME
i i 1 1 » i i 1 1 1 r
t 1 1 i 1 1 1— • —
53 55 57 59
39 41 43 45 47
49 51
YEAR
DIVISION OF WATER RESOURCES
U.S. CURRENT DOLLAR
DE.
SC.
DATE 4-26-67
DR. C.H.N
APP
SHT I
REV.
OF I
NO. A85
PLATE NO. 18
81
\
UJ
Q- X
\
\
o
o
o
o
o
m
~3~
o
03
rO
"3"
O
rO
O
O
0J
ro
O
o
03
00
suvnoa ni 3wodni
r
03
it.
o
7
G
to
>
Q
UJ
o
00
oc
<n
3
g
^10
10 <
(0 UJ
>-
10
o
03
L
DIVISION OF WATER RESOURCES SC
VA. PERSONAL INCOME
DE.
DATE 5-4-67
DR. C.H.N.
APR
SHT
REV.
OF I
NO. B9I
PLATE NO. 19
82
PER CAPITA INCOME I960
COUNTIES 8 CITIES
NEW RIVER BASIN . VA.
feooo-
<
o
Q
Ul
o
o
8|000-
LU
<
I-
CO
a
z
ac
CO
LJ
&
>-
OC
u
2
o
o —
»- *
z <"
S 3
Q.
>-
O
Q
OC
o
O
<
OC
>■
o
X
<
<
m
o
a.
oc
<
<
OC
o
>-
o
o
to
>-
<
OC
X
>■ -I
2 u
Ul
N
<
LlJ
X
»-
>-
5
DIVISION OF WATER RESOURCES|SC.
PER CAPITA INCOME I960
4- 6-67 SHT.
APP
REV.
OF I
NO
PLATE NO. 20
83
4800-1
4600-
4400
4200
4000.
3800-
3600-
* 3400-
o 3200
^ 3000
o
o
2800
2600-
2400-
2200-
2000-
1800
1600
1400
"BENCHMARK" PER CAPITA INCOME PROJECTION
NEW RIVER BASIN 1960-2000
BASIS' PROJECTION OF GROSS MFG. OUTPUT 1965 DOLLARS
YEAR
I960
1970
1980
— I
1990
2000
DIVISION OF WATER RESOURCES
PER CAPITA INCOME N.R.B
DE.
SC.
DATE
67
DR. C.H.N.
APP
SHT
REV.
OF
NO. 8 89
PLATE NO. 21
Sk
"benchmark" per capita income projection
(tentative developmental)
APPALACHIAN AREA OF NEW RIVER BASIN
1960-2000
to
o
o
Q
4600-,
4400
4200-
4000-
3800
3600-
3400
3200
3000-
iu 2800-
2
O
o
E 2600
2400
2200
2000
1800-1
1600
1400-
1200
/
./
I960
/
/
/
/
/
/
/
/
/
/
/
/
/
/
/
/
/
/
YEAR
-I
1970
1980
1990
1
2000
SOURCE: US. ARMY CORPS OF ENGINEERS OFFICE OF APPALACHIAN STUDIES, 1967
DIVISION OF WATER RESOURCES SC
TENTATIVE DEVELOPMENT
DE
DATE 5-1-67
DR. C.H.N.
APR
SHT.
REV.
OF I
NO. B 90
PLATE NO. 22
85
HISTORICAL GROWTH IN PER CAPITA INCOME
IN DOLLARS
lOOO-i
500
1000-
500
t « 1 i 1 1 1 1 1 1 1 1 r — | 1 1
45 47 49 51 53 55 57 59
CARROLL COUNTY
DIVISION OF WATER RESOURCES SC
HISTORICAL GROWTH
DATE 5-4-67 SHT 3
DE.
DR.C.H.N.
APP.
REV
OF 6
NO. A94
PLATE NO. 23
86
HISTORICAL GROWTH IN PER CAPITA INCOME
IN DOLLARS
IOOO-
500
<
-i r
— I 1 1 1 1 r
45 47 49
1939
I00O
500
41
43
51
-i r
53
—i — i 1 — i 1—
55 57 59
FLOYD COUNTY
— i 1 1 —
43 45
— i 1 1 1 1 1 1 1 1 1 1 i 1 i
47 49 51 53 55 57 59
CRAIG COUNTY
DIVISION OF WATER RESOURCES SC
HISTORICAL GROWTH
DE.
DATE 5-4-67 SHT 2
DR. C.H.N.
APR
REV.
OF 6
NO. A93
PLATE NO. 2k
87
HISTORICAL GROWTH IN PER CAPITA INCOME
IN DOLLARS
IOOO
500-
—i — i 1 1 — i — i i i i 1 — i 1 1 1 — i 1 1 i i — i 1
1939 41 43 45 47 49 51 53 55 57 59
500i
IOOO
500-
GRAYSON COUNTY
1 r 1 1 1 1 1 1 1 1 1 r-* — i 1 1 1 1 1 1 1 y
1939 41 43 45 47 49 51 53 55 57 59
GILES COUNTY
DIVISION OF WATER RESOURCES
HISTORICAL GROWTH
SC.
DE.
DATE 5-4-67
DR. M.N. F.
APR
SHT. 4
REV.
OF 6
NO. A95
PLATE NO. 25
88
HISTORICAL GROWTH IN PER CAPITA INCOME
IN DOLLARS
«
1500-
1000-
V) /
Q= _—■ —
< ^— -—"-"""
_i ^, — ■ -""
_i /
o /
Q /
Z /
-
2 /
o ^-^
500-
U IIIIIIIITIIIIIIIIIIII
1939 41 43 45 47 49 51 53 55 57 59
MONTGOMERY COUNTY
DIVISION OF WATER RESOURCES
SC.
DATE 5-4-67
SHT. 6
OF 6
HI
STORICAL GROWTH
DE.
DR. M.N. F.
APR
REV.
NO. AS7
PLATE NO. 26
89
HISTORICAL GROWTH IN PER CAPITA INCOME
IN DOLLARS
IOOO
500
1939
I500i
1000-
500
Till
43 45
i i
47
49 51
WYTHE COUNTY
-i r
53
— i—
55
~~ i — i — i —
57 59
1939 41 43 45 47 49 51 53
PULASKI COUNTY
55
57
59
DIVISION OF WATER RESOURCES SC.
HISTORICAL GROWTH
DE.
DATE 5-4-67
DR.M.N.F.
APR
SHT 5
REV.
OF
NO. A 96
PLATE NO. 27
90
HISTORICAL GROWTH IN PER CAPITA INCOME
IN DOLLARS
IOOO
500-
-i 1 1 1 1 1 1 1 — l 1 — l 1 1 1 1 1 1 1 1 — l 1
1939 41 43 45 47 49 51 53 55 57 59
SMYTH COUNTY
IOOO
500-
■—i 1 r— t 1 1 1 1 i i i i i 1— i 1— i 1 i i 1
1939 41 43 45 47 49 51 53 55 57 59
TAZEWELL COUNTY
DIVISION OF WATER RESOURCES SC
HISTORICAL GROWTH
DE.
DATE 5-4-67 SHT I
DR. C.H.N.
APP
REV.
OF
NO. A92
PLATE NO. 28
91
CHAPTER XI
DEVELOPMENTAL ASPECTS OF RECREATION
Clawson and Knetsch hold that the value of recreation at a
particular facility can best be determined by a consideration of
the total value or welfare of the recreation site in the context
of the area considered, d.
This concept is compatible with the method of analysis used
to deal with recreational development throughout this volume.
Assuming that an additional three million dollars is invested
in recreation in the New River Basin, its full value can be expected
to be effective in the immediate areas of influence in approximately
five years. After that time, no more than a 20 percent annual
residual impact on area service income can be expected from the
original investment. Assuming an average rate of growth, these
ancillary services would be included within a 5+ year projected
residual impact. It is clear that continuous growth and investment
must be elicited in order to stimulate economic expansion from
recreation expenditures. Available information suggests that the
influence of recreational expenditures are highly "sectoral" within
the regional economy. Preliminary work with employment multipliers
indicates that the numbers and types of employment generated do
not significantly affect the total employment situation. The
9 Economics of Outdoor R ec reation . Marion Clawson and Jack L. Knetsch
Published for Resources for the Future, Inc. by Johns Hopkins
Press, Baltimore
92
inter-sectoral economic growth which is generated will be growth
which is complemented by the recreational investment.
Elements relating this significance are specially treated
as each group of factors is discussed in this volume.
The Virginia Division of Parks has made detailed studies of
recreational potential in the New River 3asin and has formulated
a series of plans to make effective use of some of the attractions
of the area.
The Appalachian Power Company has proposed the construction
of a hydroelectric power reservoir and dam on the New River near
Fries, Virginia- The reservoir and dam will be known as the "Blue
Ridge Project" and if constructed, will provide the following benefits:
1. Creation of a new recreational area,
2o Use of 300,000-plus tons of coal per year by steam generating
plants for pumping operations. Estimated employment will be provided
for 100 miners for a full work year with a payroll of $^50,000.
Multiplier effect would extend to the transportation industry as
well as to other industries. As an example, 300,000 tons of coal
would fill ^,300 seventy-ton hopper cars.
3- Approximately $300,000 can be expected in annual property
tax revenues to Grayson County.
Estimated cost of the Blue Ridge Project in 1 965 was approxi-
mately $12^,000,000.
Approximately a million and a half visitors a year might initially
be expected to use the recreational facilities created by the Blue
Ridge Project. Experience at other projects indicating an expenditure
of $2.11 per day per visit at or near the water sites equals $3,165,000
93
The expenditures might break down this way
Food in Restaurants $ .65
Food in Groceries $ .10
Lodging $ .30
Gas and Oil $ .25
Other Transportation $ .06
Mi seel 1 aneous $ . 75
TOTAL $2.11
$
975,000
$
150,000
$
450,000
$
375,000
$
30,000
$1
,125,000
$3
,165,000
Sh
CHAPTER XI I
THE VALUE OF WATER UNDER RIPARIAN LAW
The present frame of reference for considering the value and
potential of water resources in Virginia is done in the framework
of r ipar ian law.
In considering the value of water and related land resources
it is well to have a clear idea of this doctrine*
"The value of water under riparian law: 'The riparian doctrine'
which does not confer rights to specific amounts of water but permits
the riparian owner to use any amount of water so long as he leaves
it 'reasonably' unimpared in quantity and quality holds in the
Eastern States, Where this doctrine prevails, market transactions
reflect the value of water use per se through the values of riparian
real estate and much more indirectly through the transportation
and access costs which nonnparian users incur.
"The first of these - real estate values - which result largely
from relatively inexpensive water supply and waste disposal and
the value of navigation, recreation, and amenity, is at least in
principle subject to census. It would be desirable to collect
land value data in such a way as to permit comparisons between
riparian and nonriparian lands with the former classified by use
and character of the contiguous water body.
"The second type of utility which the market reveals is payment
for access by nonriparians largely for recreation use. (The va!ue
of recreation as such either as reflected in land values or as
95
deducible from willingness to pay for access does not appear in
the national income accounts.)
"This is an important element in the value of almost all large
bodies of water. Research has shown that a consistent measure
of demand can be derived from such data. Questionnaire methods
may also be useful for getting at the evaluation of nonriparian
users. These methods are still under development, however, and
while the committee sees great value in and wishes to encourage
research along these lines, it does not feel that a stage has been
reached where appropriate data could be included in a census-type
act i vel y .
"It should be noted of course that the comments made with
respect to the possible incorporation of capital value of flow
regulation facilities in riparian land prices under point A (Value
of water under appropriation law) apply to point 3 as well. (The
value of water under riparian law.)" - —
10 Measuring The Nation's Wealth
Materials developed by the Wealth Inventory Planning Study, the
George Washington University and presented by the Conference on
Research in Income and Wealth to the Subcommittee on Economic
Statistics of the Joint Economic Committee Congress of the United
States, Washington, December 1 964 , p. 584.
CHAPTER XI I I
WASTE IN THE NEW RIVER ECONOMY
What are the alternative uses of resources presently existing
in the New River Basin? Can they be made to yield more with additional
planning? These are the questions which will be raised. Some
of the material will point out negative or "neutral" uses of resources.
More important are hints of benefits (values) which can easily
be overlooked if they are not examined closely.
At the present time, there are areas in the New Basin where
desirable land is being used for auto junkyards and other depots
of goods in various states of disrepair. Some land use is also
being influenced by run-down or poorly designed structures. Zoning
does not appear to be evident or effective in many areas where
it would be socially desirable. There is a potential for abandonment
of structures in various stages of use or disuse. This can have
its effect on the potential uses of water resources of the Basin.
Structures located along the River and later abandoned or allowed
to fall into disuse or disrepair exert a negative influence on
those who might develop industrial sites. Where poor locational
choices have been made along river banks and structures later abandoned,
it may be wise to require that such structures be removed within
a reasonable period of years.
Some consideration should be given to the value of clean water
pouring into the New River from streams or creeks. The benefits
which could be obtained by smaller impoundments for water supply
97
or low-flow augmentation can be measured by the value to potential
water users in Virginia, Water which is expended, so to speak,
in the New River Basin in Virginia is lost to Virginia as the River
leaves the State. Clean water is not so cheap that this can be
done without lost opportunity costs.
93
CHAPTER XIV
WATER COSTS AND VALUATION OF WATER RESOURCES
Comparative Water Costs
Small water systems must charge more for water supplied to
major volume sndustr al users than larger water systems. Consequently,
with many smaller communities in the New River Basin, there should
be coordinated efforts to plan larger water supply facilities which
could offer water to a number of communities at lower rates to
potential industrial users. The capacity of the New River itself
to meet all future needs should not be overrated, just as it should
not be underrated.
The ultimate cost of purchased water to some industries in
the New River Basin, depending on source of supply, was higher
than that amount shown on the national chart, Plate 29,
There has been some increase in the national cost of water
from 1 95^* to the present, and comparison of these national costs
to costs in the New River Basin may be misleading. Most 19&6 public
water supply rates in the New R-ver are given for what would be
"small volume" users in the nat<onal (195^) figures. However,
industrial users wishing to use 'arge quantities of public water
supply could probably negotiate separate rate contracts. Small volume
users would be those who use less than 800,000 GPD, Average volume
users would use between 3-2 MGD and 20 MGD Major volume users
would use in excess of 20 MGD and would usually provide their own
source of supply. The information used in compiling the National
99
CENTS
PER
1000
GALLONS
NATIONAL
COST OF WATER PER 1,000 GALLONS
INDUSTRIAL WATER USERS -1954
MAJOR
VOLUME
AVERAGE
VOLUME
"small
VOLUME
DIVISION OF WATER RESOURCES
IND. WATER USERS
SC.
DE
DATE 12-
66
DR M.N.F
APR
SHT.
REV.
OF
NO. A 25
PLATE NO. 29
100
Cost of Water Chart may be found in the Report of the Select Committee
on National Water Resources, Report No 29, U.S. Senate, 87th Congress,
Washington, GPO, 1 96 1 , p. 35-
Plate 30, "Composite Point Industrial Water Rates at Hundred-
Thousand Gallons Points, Six Communities New River Basin," is a
graphic presentation of approximate point rates. Its value in
this context lies in the observation of the diversity of municipal
water rates in a small geographic area. One industrialized community
is on the high side of the chart. Several communities are on the
low side of the chart. Differences in size of plants are evident
in the price structure, However, many disparities are not so easily
explained. Choices as to source of water and subsequent treatment
required are other cost factors.
What seems to be suggested is the lack of coordinated planning
of regional water supply and the proper weighing of this water
supply in the overall industrial development picture. There is
the suggestion here that water resources are not receiving the
consideration due them in order to obtain maximum benefit to the
area .
Major water using establishments usually supply their own
requirements, with usual maximum cost held in the ranges shown
in Plate 29.
A discussion of economic incentives to assure water conservation
practices with an appeal for research efforts in the area with
which we are dealing may be found on Page 59 of the "Report of
the Select Committee on National Water Resources," Report No. 29,
Senate of the United States, 37th Congress, GPO, Washington, I96I.
101
COMPOSITE POINT INDUSTRIAL WATER RATES
AT THOUSAND GALLON POINTS
(SIX COMMUNITIES NEW RIVER BASIN)
100
200 250 +
HUNDRED THOUSAND GALLONS MONTHLY
DIVISION OF WATER RESOURCES
COMPOSITE POINT
INDUSTRIAL WATER RATES
sc.
DE.
DATE 2-8-67
DR. M.N.F
APP.
SHT. I
REV.
OF
NO. C 35
PLATE NO. 30
102
Valuation of Water Resources
In I960, approximately $1,517,000 was spent in the Virginia
3asin area for water supply expenses and an additional $1,59^,000
for sewerage expenses; a total of $3, HI, 000 (Plate 31). This
represents approximately 17 percent of the total county tax revenues
for the year 1 962 «
Using a National average figure derived from Water Resources
Development , Capital investment Values, by Walter L. Picton, 6DSA,
U. S, Department of Commerce, Water and Sewerage Division, GP0 ,
1959, p. 3, and taking per capita replacement value of water resources
in 1 965 at $1,000 (per capita) multiplied by estimated New River
Basin population of 185,000, we arrive at an estimated figure of
$185 million as "National average replacement value" for water
resources in the New River Basin. While we have no presently developed
valuation procedure to confirm this figure within the New River
Basin, it does seem to tie-in with our Water Economic Intensities
(see Chapter XVI 1 I) .
Looking at projected growth areas and projected outputs, it
seems possible that water and related land resource expenses for
the New River Basin area may be m the following ranges:
1970 1980 1990 2000 2010
$5,000,000 $9,000,000 $11,000,000 $12,500,000 $15,000,000
2020
$18,000,000
This can hardly be called phenomenal growth in facilities.
One aspect of demand which could radically alter this projection
would be the requirement of comprehensive sewer line and sewage
treatment facilities in a major part of the Basin. Because of
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FINANCIAL FACTORS
SC.
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PLATE NO. 31
]Qk
the topography and geographical spread of large sections of the
Basin, this is unlikely in the near term. Further refinement of
future water resource development costs will be found in Volume
V of the Comprehensive New River 3asin Plan.
05
CHAPTER XV
INDUSTRIAL GROWTH AND FUTURE WATER NEEDS
Water facilities will be subjected to at least three times
present demand by the year 2010- in order to meet this demand,
capital will be required to develop systems in a progression to
meet needs. The cost of providing increased facilities is somewhat
less as the quantity of users increases. The initial outlay is
the heaviest item.
The projected growth in output by industry will involve increased
use of all of the factors of production- increased use of water
for industry can be expected. Technological advances which will
maximize effective water use and minimize offens ; ve effluent will
probably come slowly in the expected industrial mix in the New
River- Basin- The type of industries which will be along the New
River will be those which use the River's water for various stages
of the manufacturing process and will consequently contribute to
the sources of waste loading in certain areas of the River, Only
by wise location of resource developments can the maximum benefits
be derived from all the resources of the New River,
At the present time existing water pollution control law penalizes
only the source of pollution. Changes in the ecology of a river
brought about by the construction of dams and reservoirs may resu't
in deterioration of the river even though sources of waste, wh ' ch
previously presented no problem, remain unchanged. Thus, unwise
location of water resource development may place industry or other
106
sources of waste in the position of estimating the possibility
of future dam and reservoir erection,
SfC Water Use Comparison
Excluding the large use of water for cooling in electric plants
and defense production, the following four-digit SIC (Standard
Industrial Classification) Code breakdown of industrial water use
in the New River Basin represents the situation existing in 1 965 -
Remaining Major industries Wei ght
SIC 1421 Crushed and Broken Stone including Riprap 11.759
SIC 1441 Sand and Gravel 3-759
SIC 2022 Cheese Natural Processing NA*
SIC 2023 Condensed and Evaporated Milk .211
SIC 2026 Fluid Mi ' k ,022
SIC 2042 Prepared Feeds for Animals and Fowl ,144
SIC 2086 3ottled and Canned Soft Drinks ,672
SIC 2231 Broad Woven Fabric Mills Wool including Dyeing
and Finishing ,080
SIC 2261 Finishers of Broad Woven Fabrics of Cotton .449
SIC 23 1 6 Inorganic Pigments 1,531
SIC 2819 Industrial inorganic Chemicals, n„e.c. 2.718
SIC 2823 Cellulosic Man-Made Fibers 72.175
SIC 3111 Leather Tanning and Finishing .309
SIC 3251 Brick and Structural Clay Tile . 069
SIC 3295 Minerals and Earths, Ground Ore Otherwise Treated 3-743
SIC 3452 Bolts, Nuts, Screws, Rivets and Washers .366
SIC 3532 Mining Machinery and Equipment except Oil Field
Machinery and Equipment .299
SIC 3621 Motors and Generators .224
SIC 3678 Electric Components and Accessories, n.e.c, ,404
•-'' - Not a\/a i lable
Water-Use Ranking of "Remaining Industries" Above One Percent of Total
1. SIC 2323 Cellulosic Man-Made Fibers 72.175
2. SIC 1421 Crushed and Broken Stone including Riprap H-759
3- SIC 1441 Sand and Gravel 3-797
4. SIC 3295 Minerals and Earths, Ground Ore Otherwise treated 3-743
5- SIC 2819 industrial inorganic Chemicals, n.e.c. 2.718
6. SIC 2816 Inorganic P'gments 1.531
3earing in mind that public water use will probably approximate
11,000,000 GPD within the decade, which would compare as 11.7
percent of total 1965 water use, this use is now outweighed by
107
two SIC classifications - SIC 2323 and SIC 1421.
Since water use is tied to basic industries, it is toward
the future demand for basic products that we should direct our
attent ion.
SIC 2323 parallels the growth of chemical and allied industries
as a class. This growth has been steadily upward with only slight
pauses to conform to the movement of the general economy. A greater
than average growth rate can be expected from this industry,
SIC 1^21 is closely tied to movements of the general economy
and we can expect the prognosis for the general economy to hold
true for this industry's growth. The growth trend here should
be modest -
Future Water Requirements of C h e m i c aj a n d A 1 lie d I n d ust r i es
The experimental value added extension for manufacturing serves
as a factor in estimates of future industrial water needs. To
illustrate the use of value added and projected water use, chemical
and allied industries have been selected for the following discussions
Our non-computerized value added extension lacks the necessary
degree of accuracy to justify its use to project the needs of other
industries in the Mew River Basin. It is felt, however, that the
projections presented for the chemical and allied industries are
significantly valid. It is to be remembered that present methodology
is the best we have, and that we are operating "at the frontier"
of the state of the art in the United States today.
On Plate 32 the dotted lines shown represent the historically
expected use levels as the Division of Water Resources's "Best
Projection" The red line represents water use projected on federal
103
PROJECTED WATER USE
CHEMICAL AND ALLIED INDUSTRIES
NEW RIVER BASIN
400
1960-2020
300
20
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J- "STATIC" EMPLOYMENT
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1 1 1 1 1 1
' "960 '63 1970 1980 1990 2000 2010 2020
YEAR
DIVISION OF WATER RESOURCES
SC.
DATE 2-20-67
SHT 1
OF 1
PROJECT
ED WATER USE
1960-2020
DE.
DR.M.N.F
APR
REV.
NO. B-39
PLATE NO. 32
109
use estimates.
Federal projections are based on data presented on Pages 5
and 6 on Committee Print No. 8, Water Resources Activities in the
United States, Future Water Requirements of Principal Water-Using
Industries, Select Committee on National Water Resources United
States Senate , April I960.
The blue line represents the Division of Water Resources water
use projection based on value added and unadjusted for any external,
changing technology. It is entirely possible that New River Basin
water demand for the chemical industry may approach this line.
The broken black line represents a static projection based
on real and projected employment and a constant water use factor
per employee extracted from limited survey data done in other parts
of the country.
The area above the static employment projections, illustrated
with "give" arrows, is the area in which changes in technology
have their maximum play in adjusting projection for future water
use.
Detailed estimates for future industrial water demands will
be contained in Volume IV.
CHAPTER XVI
CAPITAL REQUIREMENTS
In 1966, the General Assembly enacted legislation providing
for the issuance of industrial revenue bonds. Local authorities
are enabled to issue industrial revenue bonds to cover the costs
of land, buildings and equipment for manufacturing, research, and
distribution facilities for lease or lease-purchase by suitable
companies. This type of legislation assists in the measured growth
which is most natural to a river basin,
A very important e^ment to intensive development of the Basin
by the year 2000 is a projected need for at least three times the
present investment capital available locally.
The use of an industrial development finance authority, prefer-
ably using Statewide credit sources and any Federal development
funds which may become available, would go a long way toward meeting
the obvious capital needs of industry in locating in desirable
areas of the Basin,
Preliminary analysis suggests that in order to meet the projected
growth in manufacturing industry in 1980, additional capital of
at least $175 million will have to be made available in the area.
Naturally, some industries will use their own capital sources to
meet their needs. Others will take advantage of financing plans
sponsored by other industries, towns, cities and various industrial
development authorities. Some State or Federal money may be involved
in financial location. Water resource projects can be coordinated
with these plans in such a way as to aid in meeting the capita)
needs of the area.
The banks of the area have effective deposits of over $238,000,000.
Effective loans and discounts are in excess of $140,000,000. Considering
the population of the area, it appears that such a volume of loans
would suffice for individual needs and for a portion of total expected
business needs. Money has already come in, or is coming in, from
other sources. There are some restr-ctions imposed on area growth
by the requirement that new enterprises bring in so much of their
own capital. Light-capital, heavy-labor industries are most attracted
to this climate. Extractive and land-base industries are already
here and located. In the New River Basin, heavy-capital industries
make the greatest total demand on water resources at present. This
is not likely to change much in the foreseeable future. An increase
in light-capital industries can be expected in the New River Basin,
Demands upon the water resources of the New River will come from
a growing chemical industry, an increasingly important textile industry,
and a possible pulp and paper industry. Since a major portion
of the development can be expected in the Pul aski -Radford-Gl en
Lyn belts (see Development Map, Plate 9) considerations for the
upper portion of the New River should be oriented toward the population
who will live in the Basin. What developments in the New River
Basin will give the maximum in use and enjoyment returned for money
spent? Certainly, water supply, flood control, and pollution abatement
are vital for all users. Virginia has been passing a clean River's
waters to her neighbors. Population increase accompanying industrial
growth will create additional requirements which must be planned
112
for.
Since water development projects of all types cost money,
planners must be careful to plan them in such a way that they do
not subtract from a supply of local capital which could be puu
to use in encouraging a desirable type of industry within the area.
Thus, multipurpose projects for water supply, low-flow augmentation,
flood control and water quality control might be combined with
other needs for a group of towns or for several counties. A desirable
mix of public ownership of water-related recreational activities
should be encouraged. The needs of private and municipal utilities
should be carefully weighed in relation to the future needs of
an increased population for public facilities of all types. The
concept of public subsidy of many activities and necessities is
an attempted equalizer of unequal incomes. Many services such
as recreation, sanitation, and other basic needs will continue
to be supplied to individuals at less than per-capita costs, At
present, recreation should not be considered as a "money-maker"
for any group. It is better considered as a public service. Water
resources will be called upon to share in this public service concept.
They can be of incidental aid to private enterprise and should
be viewed in that light. The beauty of these resources is a thing
of great value, one which deserves as much consideration as indus-
trial or technological use.
it would probably be wise for all types of governments to
acquire "wedges" of land at various spots along the river banks
to insure public access and availability for future public facilities.
The necessity for coordinated river basin planning starts at the
113
banks of a river. Once a river bank is lined with the wrong type
of industries, it is difficult to prevent resulting damage to a
river and its water. Foresighted planning can facilitate the type
of growth that makes an area a delightful place in which to work
and live. Farming is a valuable preserver of the beauty of long
segments of river banks.
The capital requirements of farming are changing with the
economic size of farm units. Good farms will require more capital
in 1980. An increase in the number of private homeowners will
require more capital.
The recent trend in the New River Basin has been toward less
capital-intensive industry. To increase the capital in the area
in years to come, industry must come in, but it should be contributive
and wel 1 - located. The New River needs and is suited to this type
of growth, !t can contribute more than its share if man does not
squander its resources.
1U
CHAPTER XVI I
ALLOCATION OF RESOURCES AND THEIR
ECONOMIC INPUTS AND OUTPUTS
An orderly view of the economic factors at work in river basins
and their relation to past, present, and future water resource
development requires a theoretical point of view which is systematically
applied to all the factors. This theory must be based on the ordered
(desired) relationship between people and their institutions. Law
has been the main method used to express these relationships.
It is necessary to establish current values (benefits, costs)
for watercourses and water supplies and to estimate the potential
value (benefit, cost) of changed or augmented water resource develop-
ments. This is no easy task, using the methodology which has been
developed up to the present time. The purpose of this section
is to look at what we have to work with in Virginia and to explore
possible augmentations to our "tool kit." To do less than this
would be to invite, in the future, undesirable uses of valuable
resources or at least missed opportunities for resource development.
The framework of economic development has several meanings.
1 . Capi tal is scarce.
2. There is competition between various States and geographic
areas for this capital.
It is necessary, therefore, to arrive at some common theoreti-
cal base from which to measure the effects of water resources on
ultimate economic development.
115
Professor James M. Buchanan has recently said:
"The necessary conditions for optimal ity in an externality
or public goods mix have been derived exclusively from individual
evaluations placed on the separate components along with the cost
relationships. Conceptually, therefore, resort to external, non-
individualistic criteria for selecting the precise characteristics
of mul t i -d imensional public services is not required. . .Practical
application of the analysis in any specific sense would of course,
be extremely difficult. Even here, however, some conceptual predictions
become possible to the extent that broad criteria of economic efficiency
in the usual definition are accepted. The analysis allows us to
'explain' the pressures toward equilibrium, through ordinary trading,
processes if the interacting groups are critically small, or through
the working of the political process if the interacting group becomes
critically large, provided that democratic institutions prevail." _T_1_
As an alternative theory, some basis for analysis could be
drawn from section 175 of the Constitution of Virginia in which
natural oyster beds are held as a public trust:
"Section 175- The natural oyster beds, rocks and shoals in
the waters of this State shall not be leased, rented or sold, but
shall be held in trust for the benefits of the people of this State
subject to such regulations and restrictions as the General Assembly
may prescribe, but the General Assembly may, from time to time,
define and determine such natural beds, rocks or shoals by survey
or otherwise."
Since the ownership of stream and river beds is vested by
law in the Commonwealth, it should be possible to analyze the value
of the land upon which any dam, intake pipe, outflow pipe or similar
structure rests. This is not to suggest that the only alternative
is to develop such a system of costs (values), but the approach
would prove useful in ranking the benefits to be derived from various
mixes of users while still alloting the free choice mechanism to
these users. This would be more desirable than absolute government
regulation of quantities of water allowed to be consumed, which
_M_ "Joint Supply, Externality and Optimal ity" by James M. Buchanan,
University of Virginia, Economica, November, i960, pp. k]k,k\5.
116
might result from an overuse during periods of declining rainfall
or streamflow.
In the last decade there has been a definite trend in the
number of employees moving from agriculture to manufacturing in
the New River Basin. Trends in the national economy toward higher
prices and increased participation in the educational and social
advances of the Nation have had their effect upon the rural areas-
The effect of recent wars upon employment and way of life
of the populace cannot be minimized. War production is a significant
factor in the present industrial makeup of the Basin. The Basin
supplies manpower to fight the wars and to meet production needs
which are war-generated or influenced. It is difficult to maintain
traditional ways of life on the farm in an era of rapidly rising
prices and costs. Although the small farm may be less attractive
financially and as a way of life for youths of farm families now
going into industries, it may become increasingly attractive and
economical for older persons now retiring with guaranteed though
reduced income under Social Security and governmental, industrial,
military, and other pension systems, many of them at comparatively
early ages.
Manufacturing is a major consideration for the Basin, filling
the void left by the removal of workers from full- or part-time
agriculture. If the process is hastened, there can be little doubt
that an appreciable measure of social disruption will exert a negative
influence in wide areas of the Basin. This could gravitate these
areas much more toward "Appalachia" than they are now. An orderly
and slow process would maintain a reasonable growth level for the
117
3asin as a whole, and this has been assumed.
Social problems and undesirable growth patterns should not
be minimized. Growth has been less than optimum in some previously
developed areas, and an extension of past trends can be foreseen.
On the other hand, these patterns are quite favorable when viewed
in the light of problems facing most urban areas in America. With
intelligent and constructive effort, future growth could be channeled
in the Basin to create conditions which will encourage great progress.
Government should plan its resource projects with this aim in mind.
On behalf of the citizens of the State, Government is entrusted
with the duty to lead the way, to pioneer with sound innovations
and constructive actions. This spirit is assumed throughout the
entire analysis. Cooperation in this effort is expected from citizens,
councils, planning groups, Local government, State government and
the Federal Government. The citizens have a right to have all
developments correspond to the way of life which they have broadly
selected for themselves. Government must respect this choice in
all of its actions. This study suggests some alternatives presented
by economic analyses of the values inherent in the water resources
of the New River Basin. Choice among these alternatives is a function
of the enlightened citizenry of the area.
In order to establish some common basis of consideration,
in line with the realities of the situation as opposed to a theoretical
construction which would have no validity for the New River 3asin,
it is best to use monetary analysis to set up some range of benefits/
costs. In this regard, Haveman recently said:
113
"Although the money unit is admittedly inadequate as a welfare
gauge, it is nevertheless tentatively accepted, and through its
acceptance, a cautious relevance and importance for the tacit welfare
implications of the data is posited- Because the profession has
not yet developed and therefore, does not admit the existence of
any welfare gauge superior to the money income unit, and moreover,
because there is no "superman" (to use Professor Little's metaphor)
at hand to decree a welfare function bearing the real value of
money income to different individuals, the money income unit provides
the only and, therefore, the best empirical welfare measurement
available," ]2_
It is difficult at best to measure the meaningful effects
of increased, decreased, or differing mixtures of natural resources
such as water upon the people and the activity environment of an
area- Usually, it is when a resource is perceived as being scarce
or in diminishing volume (when weighed against an increasing volume
of users) that it is subjected to expenditure considerations as
to its available quantity and quality.
A basic methodology of regulating efficient use of a resource
in a free enterprise society is to allow proper supply and demand
factors to establish a price which will eliminate wasteful use
and call for augmented supply. In the past, economically, water
has been considered to be almost a free good. It is fitting that
we regard the gifts of Nature with proper reverence. However,
man's efforts in adapting Nature to man's concepts and uses have
provided increasing cost, on the one hand, and increasing utility
on the other. Physical changes and additions to natural water
flows and cycles cost money. Since man is putting the money in
for a reason, certain results should follow.
Goals to be achieved through the use of water resources are
2 Haveman, Robert H. Water Pxesource investment and the Public Interest
Vanderbilt University Press, Nashville, Tenn., 1 9&5, p^ 128.
119
most important. Since these resources are common to many, there
can be little isolated effect of a major use of water. The relative
size and influence of major "impacters" (those who make significant
use) on water use and supply is felt by the smaller user. As scarcity
or changed mixes begin to be felt, the smaller user will experience
increased lack of advantage in terms of limited use and higher
cost unless the power of the citizens in common, expressed through
their government, establishes a proper balance between all major
"impacters" including industry and Federal, State, and Local govern-
ments .
Increased industrialization under whatever mix of government-
business coalition which may exist in future, will have its effect
on waterways. Can a cost tag (value) be applied to this effect
on water resources? Certainly, discriminatory taxes on industrial
waste would be discriminatory against many individual citizens.
On the other hand, some major treatment of industrial wastes on
a centralized basis will be needed in the future. Air pollution
treatment may be a tie-in. Some industries have had only minor
changes in methods of production over the past forty years. There
is enough continuity in productive processes to allow planning
to make a significant contribution to the most economical use of
water resources.
The location of desirable and efficient industry in the New
River Basin should not, under the guise of solving some present
inequities, reflect a movement away from freer use of the water
resources but an augmentation of free and efficient usage. It
is hoped that industrialization will benefit both industry and the
120
general publ i c.
We want desirable and efficient industry to locate in our
basin areas, and we want it to be to their benefit and that of
all the citizens of Virginia that they locate here.
As a means of economic analysis and not as a "taxation" or
a "charging mechanism," the tying of values, whether they be in
terms of dollars or "usefulness," to water resources is distinctly
related to this goal of resource development.
in resource-use decisions, one difficulty in analysis seems
to lie in a hazy definition of the two different property rights,
governmental and individual. What are the real values (benefits,
costs) of these two shares when the government and the individual
are "tenants in common" of the same resource? Governments do bid
in the market in competition with individuals to establish a cost
basis used in allocating needs and values.
Water rates are, of course, a reflection of the costs of water
treatment and distribution. A sliding scale of rates prevails
within the supply cost of water to the ultimate consumer. Large
quantities of water are used at a decreased rate. Supply facilities
are amortized through revenues. The initial water supply is viewed
as a free good.
C« E. Busby has considered the relationship of water law to
economic growth:
"The more valuable water becomes, the more conflicts of interest
arise over its use and management. The conflicts may lead to insecurity
of investments and impeded or unbalanced economic growth if basic
law is not provided to assure protection of rights and a fair appor-
121
tionment of the supplies to satisfy the rights-" 12.
Busby deals with the necessary examination of the Common Law
and related regulatory and statutory developments in the light
of an economy of increased demand, use, and scarcity.
Methodology and graphics for a system similar to that outlined
in this chapter may be found on Pages 59"73 of Water Supply, Economics,
Technology and Policy by Jack Hershleifer, James C. DeHaven and
Jerome W, Milliman, the University of Chicago Press, Third Impression,
Chicago, 1966, This study was done under auspices of the RAND
Corporation, Particularly interesting is the avoidance of socialist
or bureaucratic solutions to water problems by suggestions for
methods to improve water law in order to encourage "free enterprise"
sol ut 1 ons
Speaking of the need for new analytical techniques for water
resource evaluation, Jabbar K. Sherwani has said:
"Water resource problems exhibit great complexity, diversity
and variety. Water resource systems contain meteorological, techno-
logical, economic and social components. They are under the influence
of a great many variables which interact in many and varied ways.
The traditional engineering and economic approaches are proving
to be too limiting for the solution of present day problems of
ever- i ncreas i ng complexity. It is becoming necessary to proceed
along new and unorthodox lines. Only very recently has the theory
of probability, time series analysis, regression and correlation
techniques, theory of sampling, and computer simulation been used
on a large scale in the analysis of water resource systems. Techniques
of analysis will have to be further developed to assess the relative
value of water in its various uses from both an economic and social
po i n t of v i ew . " 1 h
13 The Yearbook of Agricultural Water , U,S. Department of Agriculture,
" GPO, Washington, D.C., 1955, p. 666. 84th Congress, 1st Session,
House Document No, 32. This entire article appears on pp, 666-76.
J_4 "Mul t idi scipl inary Research As An Aid to Public Policy Formation,"
Water Resources Research Center, Virginia Polytechnic Institute,
Blacksburg, Virginia, 1965,
22
It is to meet this need that this method of analysis is postulated
It should be kept in mind that this is a tool of analysis and may
not represent a socially desirable event.
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CHAPTER XVI I I
WATER-ECONOMIC WEIGHTS OF ACTIVITIES ON A MONETARY BASIS
IN THE NEW RIVER BASIN
An important factor in economic development is to be able
to gauge the impact of an increase in the supply of money (invest-
ment) upon a mix of activities within a given area. These relationships
and their effect on demand (price) and value (supply) are necessary
to the selection of methods to stimulate growth through water resource
development.
There is need for an expression of relative intensities of
activity within the New River Basin with a common financial relationship
to the existing water resources (omitting secondary values resulting
from the use of water). Admittedly, this is a most difficult set
of functions to derive. The results are those of the "ultimate"
rounds, and are therefore long-term. Because of its importance,
some effort has been made in this direction. The reader should
bear in mind the relativity of such studies which extract judgment
factors in complicated relationships. The list is by no means
complete. These relationships may also be used, in inverted form,
to obtain the impact of a general investment in Water Resources
upon the factor in question, Ceteris Paribus .
Total Bank Deposits
Total County Tax Revenue
Prevailing Rate of Interest
Value of Lumber Lands and Trees .5
Value of Buildings and Improvements -3
Value of Town Lots .3
Value of Mineral Land .5
Value of Mineral Land and Improvements
}2k
Total Value of Minerals 1
Al 1 Farm Products Sold 3
Crops 5
Livestock 3
It should be noted that this is a "free enterprise" model
which would have to be adjusted, in time sequence, for entirely
public expenditure. It is believed that expansion benefits from
public expenditures would duplicate these results in a favorably
developing economy but there would be a time lag differential,
in rounds, vis a vis private expenditure. Naturally, a significant
balance of private expenditure is required within this framework.
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CHAPTER XIX
THE INFLUENCE OF MONETARY FACTORS ON LAND VALUES
AND SUBSEQUENT URBANIZATION IN A RURAL ECONOMY
Interesting work has recently been done in the monetary field
which is relevant to this study of the New River Basin, The nature
of the relationship between industry and water use and between
water and related land resources, has been explored,, How may the
current trend in the national economy toward inflationary price
structure and increased rates of interest affect the Basin's growth?
In a study on "Rising Interest Rates and Agriculture," Clifton
B, Luttrel I of the Federal Reserve Bank of St< Louis discusses
the impact that differences between farm mortgage rates and expected
rates of return of farm land may have on land value. He cites
a growing number of studies which indicate the nature of this impact
and gives the following formula:
V = Y_
r
where
V = current land value per acre
V = flow of residual income per acre
r = rate of return on alternative investments.
This formula, similar to that for a stream of income in perpetuity,
suggests that any increase in the rate of interest results in a
corresponding decline in current land value. The initial analysis
shows that the rate of change in land value caused by changes in
the rate of return (r) on alternative investments is significant-
126
As an example, a 10 percent increase in this rate from 5-0 to 5*5
percent results i r, a 9 percent decline in land values.
National figures indicate that nearly three-fourths of all
farm land sales in recent years have involved credit. Debt incurred
as a function of purchase price has also tended upward, reaching
72 percent in 1965-
Luttrell indicates that demand for farm land has been affected
by farm technology. Increased yield per acre has tended to increase
production and reduce farm commodity prices*
The use of significant quantities of land in the New River
Basin for flood control, hydroelectric power generation, water
storage and recreational projects would tend to stabl ize the loss
incurred in land values through secularly rising interest rates
and rates of return.
This influence on the supply would affect the demand from
urbanizing centers. Costs of land for urban and possibly industrial
uses would rise. The quantity of existing available land would
dictate the relative restrict iveness or stimulus to growth.
Alternatively, it is possible that higher secular rates of
interest and rates of return would make investment in projects
necessary to prevent significant deterioration in land values due
to agricultural displacement. Thus, these projects could be the
bulwark which prevents these areas from losing their industry and
urbanization attractiveness. The approach here is to secure the
proper balance of projects to land uses. One method is to adopt
zoning which provides flexible consideration for agriculture, natural
resources and industry. This approach is presently not applied
127
to the Basin area as a developable entity. After projects have
located without such comprehensive evaluation, it is difficult
to blend them in the manner that can be done by initial planning.
As an example of the weight of value in the Basin, estimates
suggest value of town property in the Basin is better than that
of all rural property. Suffice it to say that this acreage is
much less than rural acreage. There is a great impetus to "urbanize"
purely from the profit standpoint
Looking again at the National economy, the prognosis for the
New River Basin is increased urbanization. Large projects of the
type described may be viewed as amel iorants of this trend and as
"friends of agriculture." From a long-run standard of value it
appears that there is increasing value to the body politic and
even to individual long-term investors in maintaining some un-
urbanized land- Such projects can be broadly viewed as aiding
water resources conservation in the sense that they hold the balance
toward moderate water using industries,
it also appears that the book value of machinery and tools
in the Basin shows a less than one:f ive ratio to the value of rural
land. This would an area
of distinct natural beauty, not too far removed from centers of
population. If first-class connector roads can be provided between
the major highways, such as Interstate 81 and Interstate 77, publicity
can insure adequate use of those facilities which are properly
developed and of sufficient quality and quantity. At a later point
in the cycle the benefits be fully appreciated. These projects
will not be fully developed on a short-term basis. The economy
of the United States does not operate in this fashion today and
will not in the future.
Development of a large water resource project would be economically
beneficial to the New River Basin. This should be a participation
effort of private enterprise, and local, State and Federal Government.
33
CHAPTER XXI
WATER RESOURCES ECONOMIC DEVELOPMENT PROGRAM FOR
THE NEW RIVER BASIN AND GOALS FOR DEVELOPMENT PLANNING
The economic analysis of the New River Basin is one that is
geared toward the growth of the area. Without growth, any consideration
of the water resources of an area would be historical in character.
Since the objective is to help stimulate growing uses of existing
resources, which may be in an early state of development, it is
useful to stimulate general appreciation of the concepts which
can lead to this development:
1. What is the total value of the existing bodies of water in
the New River Basin?
a- Will nature change that value in the near future?
b. Will man change that value?
2. To whom should these bodies of water belong?
a. Does present "ownership" suit the desired social
compact entered into by all the residents of this
Basin?
b. If not, how can this compact be modified or augmented
in an orderly manner?
3* Can or should these bodies of water be used in such a way
as to increase their value and the value of other resources
and works of man within the Basin?
a. Who should do this?
b. How should it be done?
13*
k. Should the bodies of water in the Basin be left as nearly as
possible in their natural state?
a. Is this practicable, assuming increased future water
needs?
b. What is the cost of such a choice to the people of
the Basin? The State? The Nation?
5. Should we defer the answers to any of these questions until
some future time?
Economic theory does not give us an answer for the determination
of ultimate values such as these. Rather, choices between things
based on their "utility" to the user or their "welfare" to the
recipients assume that these choices have already been made by
someone. It can be profitable to remove the tautology and return
the decisions to the citizenry, as has been attempted through the
use of questions. The citizens can make the type of social compact
they want if the value of the benefits is presented clearly enough.
The possibilities which can result from choices which will
enhance the value of the water resources of the area are:
1. An improved daily life for the residents of the area.
2. Increased enjoyment and personal profit from common bodies
of water.
3. Progress anchored upon the peoples' own traditionally
selected way of life.
k. New recreational, enjoyment and employment opportunities.
5- An orderly progression of the best of the past combined
with the most promising of the future.
6. A maintenance of traditional freedom engendered by keeping
135
common values in the hands of the greatest number of people.
7. Protection of individual use and ownership.
The predominately rural cast of the New River Basin deserves
particular emphasis. Farming, influenced by new technology and
population increases, has an interesting period ahead of it. The
New River Basin has a part to play in supplying new demands.
In 1964, approximately thirty million dollars of farm products
were sold in the New River Basin. Livestock, poultry, and livestock
products out-valued crop sales by better than four to one. The
topography of the area is suited to raising cattle, sheep and swine.
As an example of the rural cast of the area, a long-established
plant in Grayson County converts local wool to woolen industrial
cloth. This particular operation has a marked influence on the
way of life in the area and is a part of it in many ways. It has
been there over a century. Recently proposed water- improvement
programs in the New River may necessitate removal of this operation
and the social nucleus which has gathered around it. There will
be some change in the way of life of the inhabitants of this area-
Although there are several large commercial farming operations
which engage in cattle and swine breeding and feeding for packing
houses, there does not appear to be any marked trend toward centralized
farming in the New River Basin at this time. Ground water plays
a large part in meeting the water needs of this type of operation.
River uses, in the economic sense, in rural counties could
be 1 i sted as:
1. A water resource which is of significant value in the
natural setting - as mineral wealth, rich agricultural
136
land, etc . , mi ght be.
2. A means for flushing, transporting or disposing of mining
and industrial residuary products.
3. A source of power supply.
4. A limited source of recreation for certain groups.
5. A natural boundary marker (especially for farm and grazing
lands . )
6. A source of water for industrial, farm and residential
uses .
7- An area of natural beauty with secondary tourist attraction
It is also possible that the River, along with the rest of
the topography, helps to maintain a recreational way of life which
is acceptable to the residents of the area.
The more populous areas of the Basin have experienced growth
which resembles that of the Roanoke area. In the future, areas
which have "neat" towns will probably attract a higher grade of
industry and business than areas which have a poor past history
and lack planned growth and investment. There would appear to
be little competition between agriculture and industry for land
as things now stand. Indeed, there are some "trade-offs" constantly
going on between the two.
An increase in the number of smaller economic-size farms in
some counties can probably be explained by the prevalence of persons
just below retirement age who have contented themselves with a
modest way of life and the benefits of life on a small farm. This
economic factor and others like it will help to maintain a modest
growth rate in most rural parts of the Basin. The present industrial
137
mix is tied to the natural resources and agriculture. Until this
basic orientation changes, it is unlikely that the New River 3asin
will lose its agricultural advantage.
Goals of Development Planning
A clear establishment of general goals for a river basin is
necessary to an ordered view of its future. The goals of the people
in the New River 3asin, young and old, and the tone of life which
they set for themselves will influence future development. The
basic question then is how much can this 3asin yield to its inhabitants?
What are the potentials of the New River Basin?
Given desirable employment for which the individual is suited,
there is ample living space to accommodate the projected population
in clean and healthful surroundings. Such a potentiality, however,
must be planned for and protected. Zoning plans and regulations
are helpful. Upgrading industries which make use of the higher
facilities of man and which produce desirable products should be
encouraged. Planning can go a long way toward reducing corresponding
outlays of home capital.
Public facilities, local, county, state, and national, should
be situated according to a regional plan rather than merely to
meet strictly local needs.
Integrated water and related resources use needs a long period
of preplanning. If justified, water resource development should
be multipurpose and for maximum benefits. It is difficult to measure
value by a single instance. What, for example, is the value of
a recreational lake costing $60,000 to one man fishing alone for
three hours on a certain day? What is its value when he decides
138
on the basis of his impressions and likes to investigate locating
his enterprise in the area? What is its value to the area when
he locates his drug company in the area employing 100 local people
with an annual payroll of $600,000 and annual local expenditures
of $400,000 (increasing with the years)?
Water resource plans should be pleasing, agreeable, and amenable
to the best that the people desire.
The people of the New River Basin can mold their area with
its abundant natural resources according to their desires and needs.
139
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